Andrey V. Ivanov (Chair for Applied Microeconomics, Department of Economics, Mannheim University, D-68131 Mannheim, Germany, aivanov@rumms.uni-mannheim.de) Florian Mueller (Chair for Applied Microeconomics, Department of Economics, Mannheim University, D-68131 Mannheim, Germany, f.mueller@econ.uni-mannheim.de)
Abstract
Conventionally, we think of an increase in competition as weakly decreasing prices, increasing the number of consumers served, thus increasing consumer surplus, decreasing firms profits, etc. Here, we demonstrate that, under some tame circumstances, an increase in competition may lead to a price increase in a horizontally differentiated market. We show this relationship for the petrol market in German cities.
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Publisher Info
Paper provided by SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich in its series Discussion Papers with number
117.
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