Bertrand Competition with an Asymmetric No-Discrimination Constraint
AbstractAbstract: We 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 InfoPaper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2012-009.
Date of creation: 2012
Date of revision:
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Web page: http://center.uvt.nl
Dominant firms; price discrimination; competition policy; regulation;
Other versions of this item:
- Jan Bouckaert & Hans Degryse & Theon Dijk, 2013. "Bertrand Competition with an Asymmetric No-discrimination Constraint," Journal of Industrial Economics, Wiley Blackwell, vol. 61(1), pages 62-83, 03.
- 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 2012-004, Tilburg University, Tilburg Law and Economic Center.
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-02-20 (All new papers)
- NEP-BEC-2012-02-20 (Business Economics)
- NEP-COM-2012-02-20 (Industrial Competition)
- NEP-IND-2012-02-20 (Industrial Organization)
- NEP-REG-2012-02-20 (Regulation)
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