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Bertrand Competition with an Asymmetric No-discrimination Constraint

  • Jan Bouckaert
  • Hans Degryse
  • Theon Dijk

Regulators and competition authorities often prevent firms with significant market power or dominant firms from practicing price discrimination. The goal of such an asymmetric no-discrimination constraint is to encourage entry and serve consumers’ interests. This constraint prohibits the firm with significant market power to practice both behaviour-based price discrimination within the competitive segment and third-degree price discrimination across the monopolistic and competitive segments. We find that this constraint hinders entry and reduces welfare when the monopolistic segment is small.

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File URL: http://hdl.handle.net/10.1111/10.1111/joie.2013.61.issue-1
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Article provided by Wiley Blackwell in its journal The Journal of Industrial Economics.

Volume (Year): 61 (2013)
Issue (Month): 1 (03)
Pages: 62-83

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Handle: RePEc:bla:jindec:v:61:y:2013:i:1:p:62-83
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  1. Drew Fudenberg & Jean Tirole, 1999. "Customer Poaching and Brand Switching," Harvard Institute of Economic Research Working Papers 1871, Harvard - Institute of Economic Research.
  2. Gehrig, Thomas & Shy, Oz & Stenbacka, Rune, 2011. "History-based price discrimination and entry in markets with switching costs: A welfare analysis," European Economic Review, Elsevier, vol. 55(5), pages 732-739, June.
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  7. Armstrong, Mark & Vickers, John, 1993. "Price Discrimination, Competition and Regulation," Journal of Industrial Economics, Wiley Blackwell, vol. 41(4), pages 335-59, December.
  8. J. Miguel Villas-Boas, 1999. "Dynamic Competition with Customer Recognition," RAND Journal of Economics, The RAND Corporation, vol. 30(4), pages 604-631, Winter.
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