The paper investigates pro- and anticompetitive e¤ects of the use of market share discounts (MSDs). While MSDs can be used for exploiting a dominant position and may lead to a welfare reduction, MSDs also can serve as an e¢ cient device for the creation of incentives. Particularly, if a nal demand for an upstream manufacturers good depends on a promotional e¤ort of a retailer, the manufacturer can e¤ectively use MSDs to induce an optimal level of the retailers e¤ort. Moreover, it is possible that MSDs have a positive impact both on the consumerssurplus and the total industry pro ts. Thus the use of MSDs should not be treated as an anticompetitive practice a priori, but rather it has to be judged on a case-by-case basis.
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number
13990.
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