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A Note on the Efficiency Gains from a Refusal to Deal in a Bertrand-Nash Framework

Author

Listed:
  • Nadimi Soheil R.
  • Weisman Dennis L.

    (Department of Economics, Kansas State University, Waters Hall, Manhattan, KS, 66506-4001, USA)

Abstract

A vertically integrated provider (VIP) initially has a duty to deal with a rival at unregulated upstream and downstream prices in a Bertrand-Nash framework. The duty to deal is subsequently terminated which enables the VIP to acquire the rival and serve as a two-product, downstream monopolist. We find that the refusal to deal is efficiency-enhancing, given that prices decrease while profits increase ex post.

Suggested Citation

  • Nadimi Soheil R. & Weisman Dennis L., 2020. "A Note on the Efficiency Gains from a Refusal to Deal in a Bertrand-Nash Framework," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 20(4), pages 1-12, October.
    • Handle: RePEc:bpj:bejeap:v:20:y:2020:i:4:p:12:n:4
    DOI: 10.1515/bejeap-2020-0070
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    References listed on IDEAS

    as
    1. Farrell, Joseph & Shapiro, Carl, 1990. "Horizontal Mergers: An Equilibrium Analysis," American Economic Review, American Economic Association, vol. 80(1), pages 107-126, March.
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    3. Robinson Glen O. & Weisman Dennis L., 2008. "Designing Competition Policy for Telecommunications," Review of Network Economics, De Gruyter, vol. 7(4), pages 1-38, December.
    4. Werden, Gregory J, 1996. "A Robust Test for Consumer Welfare Enhancing Mergers among Sellers of Differentiated Products," Journal of Industrial Economics, Wiley Blackwell, vol. 44(4), pages 409-413, December.
    5. repec:reg:rpubli:608 is not listed on IDEAS
    6. Dennis W. Carlton, 2001. "A General Analysis of Exclusionary Conduct and Refusal to Deal - Why Aspen and Kodak are Misguided," NBER Working Papers 8105, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    vertical integration; duty to deal; efficiency; antitrust;
    All these keywords.

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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