Pioneer Bicycle Shop is an authorized Trek dealer.  In order to be an authorized Trek dealer, Pioneer and Trek signed an agreement where Trek agreed to sell Pioneer its entire line of bicycles and Pioneer agreed not to stock or sell any other brands of bicycles.

There are several other bicycle shops in the area that sell other manufacturers' bikes and this agreement is not likely to dramatically alter the competitive balance in any way.

a. What is this type of agreement called and how is it evaluated in the United States under the antitrust laws?

b. Is this agreement likely to be found legal in the United States or does it violate the antitrust laws in some way? Why or why not?

Answer rating: 100% (QA)

a This type of agreement is known as an exclusive dealing ... View the full answer