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Input Third-degree Price Discrimination in Transport Markets

Author

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  • Hugo Silva

Abstract

We study the efficiency of input third-degree price discrimination in transport markets. Relevant cases are transport facilities such as airports, seaports and railway stations that sell access to the infrastructure to downstream firms. The two key distinctive features of these markets are the presence of negative consumption externalities and of public ownership (domestic-welfare maximizing sellers). We find that each of these features enlarges the extent to which input price discrimination is desirable. Our main result suggests that the current practice of enforcing a ban on input price discrimination by congestible facilities may be in place at the cost of efficiency.

Suggested Citation

  • Hugo Silva, 2017. "Input Third-degree Price Discrimination in Transport Markets," Documentos de Trabajo 499, Instituto de Economia. Pontificia Universidad Católica de Chile..
    • Handle: RePEc:ioe:doctra:499
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    File URL: https://www.economia.uc.cl/docs/doctra/dt_499-1.pdf
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    More about this item

    JEL classification:

    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation

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