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Problem 18

What is a tie-in sale? How might it reduce compet…

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Problem 17

What is exclusive dealing? How might it reduce competition and when might it be acceptable?

Answer

Antitust laws are the laws and regulations that are imposed by government or authorities to
ensure the increased competitiveness in the market. It also helps observe and control mergers
and acquisition taking place between big or key firms.
Exclusive dealing means that when producer gives authority to only one dealer to sell their
goods. It is acceptable when the purpose of exclusive dealing is to promote the goods of the firm
through one outlet and help increase competition with other companies. But when some dealer is
able to have exclusive deals with many firms then the competitiveness in market reduces and
then such agreements are not acceptable.


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Video Transcript

So it's none of my exclusive dealings on agreement. So definition an agreement between producer and dealer to be the sole producers last distributor for that product. What does that mean? Well, it means that you have an agreement for from, let's say, four by four, my tail a dealer. Hey, you're only allowed to sell my product in no other product, right? Reverse, Lee, the dealer can say to the distributor. Hey, this is an agreement. Show that I'm the only one who can sell your product and you're not allowed to send it to anyone else. I'm your main distributor, Um, so it can work both ways now one Is that acceptable? Well, that's going to be when it encourages competition instead of hindering it. For example, let's take a dealer goes to, for example, movie theaters, right? Let's say that a movie theater A M C. Manages to get sole rights to show everyone marvel movies, right? So they're going to be the only people who show them. That's problematic because then you don't have competitions. You don't have any other movie theater showing those movies, so technically am she can act as a monopoly in charge, whatever price to show those movies. That's how exclusive dealings may not be acceptable

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