Exclusivity and Exclusion on Platform Markets

We examine conditions under which a platform ?rm can exclude rivals by bundling a product that some on one side of the market re- gard as essential with its platform, and pursue implications for market performance. We show that the impact of an exclusive dealing con- tract between the upstream ?rm and one of the downstream ?rms on market performance depends on the strength of consumer preferences for the products of the two downstream ?rms and the relative size of the market segment for which the complementary consumption good is essential. In some cases this may reduce the net social welfare.