Exclusive dealing is a way of securing partial vertical integration through contract. A exclusive dealing contract (EDC) is said to exist when a manufacturer (upstream) offers a sales contract to a buyer (downstream) conditioned upon the agreement that the buyer will not purchase goods from the manufacturer's competitor. Thus, with a downward EDC, the dealer is tied to the supplier. Alternatively, an upward exclusive dealing contract exists when the buyer wishes to obtain an exclusive supply from the manufacturer so that its downstream rivals are foreclosed from that part of the upstream market.' Two possible reasons have been suggested as to why an exclusive dealing contract may exist: 1) there may be a possibility of gaining horizontal market power through vertical market foreclosure, 2) an exclusive dealing contract may create superior efficiency. It is apparent that these two conflicting views support completely opposite antitrust policies regarding exclusive dealings. In order to better understand the issue, let us review some of these opposing viewpoints. A proponent of the original (now discredited) market foreclosure theory, Phillip Areeda [ 1 ], claimed that EDCs are predatory because they unfairly exclude rival firms from obtaining that part of the market. Areeda's viewpoint came under intense attack by Robert Bork [2] who suggested that there exists no market power creation with EDCs, but only superior efficiencies. Bork argues that an EDC simply results in a realignment of the shipping patterns between upstream firms and downstream firms, and induces no welfare loss for consumers. Furthermore, even if there were a predatory intent behind EDCs, it would not be effective, since the excluded rival firms may contract with the remaining firms to contest the predatory tactic. Because in Bork's view the excluded firm has this counter-strategy available, unfair exclusion is no longer a valid rationale for accusing EDCs of being predatory. However, implicit in Bork's argument is the assumption that the counter-contracting by the excluded firm would somehow neutralize the adverse effect that market foreclosure may have on consumer welfare. This assumption is valid, if and only if, the