Price Discrimination, Competition and Regulation
AbstractThis paper analyzes some effects of price discrimination policy in a model where a dominant incumbent firm faces an endogenous degree of competition in one of its two markets. Banning price discrimination tends to encourage more entry, which is desirable if the entrant is as efficient as the incumbent but has ambiguous welfare effects more generally. Prices in both markets might fall. Price discrimination policy under different forms of price regulation is also examined. If the incumbent's average price level is regulated, then allowing price discrimination can lead to pricing below marginal cost, with possible anticompetitive consequences. Copyright 1993 by Blackwell Publishing Ltd.
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Bibliographic InfoPaper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 99140.
Length: 30 pages
Date of creation: 1992
Date of revision:
prices ; competition;
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