Bertrand Competition with an Asymmetric No-discrimination Constraint
AbstractWe study the competitive and welfare consequences when only one firm must commit to uniform pricing while the competitor's pricing policy is left unconstrained. The asymmetric no-discrimination constraint prohibits both behaviour-based price discrimination within the competitive segment and third-degree price discrimination across the monopolistic and competitive segments. We find that an asymmetric no-discrimination constraint only leads to higher profits for the unconstrained firm if the monopolistic segment is large enough. Therefore, a regulatory policy objective of encouraging entry is not served by an asymmetric no-discrimination constraint if the monopolistic segment is small. Only when the monopolistic segment is small and rivalry exists in the competitive segment does the asymmetric no-discrimination constraint enhance welfare.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal The Journal of Industrial Economics.
Volume (Year): 61 (2013)
Issue (Month): 1 (03)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821
Other versions of this item:
- Bouckaert, J.M.C. & Degryse, H.A. & Dijk, T. van, 2012. "Bertrand Competition with an Asymmetric No-Discrimination Constraint," Discussion Paper 2012-004, Tilburg University, Tilburg Law and Economic Center.
- BOUCKAERT, Jan & DEGRYSE, Hans & vAN DIJK; Theon, 2012. "Bertrand competition with an asymmetric no-discrimination constraint," Working Papers 2012006, University of Antwerp, Faculty of Applied Economics.
- Bouckaert, J.M.C. & Degryse, H.A. & Dijk, T. van, 2012. "Bertrand Competition with an Asymmetric No-Discrimination Constraint," Discussion Paper 2012-009, Tilburg University, Center for Economic Research.
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
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