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The Pro-competitive Effect of Two-Part Tariffs

Author

Listed:
  • Tommy Staahl Gabriel
  • Lars Sorgard

Abstract

Two producers delegate sales of differentiated products to common retailers, each with a monopoly position. Each producer can offer either a linear or a two-part tariff. In the single-period game each producer's dominant strategy is to use a two-part tariff. If the two producers' products are sufficiently close substitutes and the discount factor is sufficiently high, both producers offering linear tariffs can be sustained as an equilibrium outcome in an infinitely repeated game.

Suggested Citation

  • Tommy Staahl Gabriel & Lars Sorgard, 1998. "The Pro-competitive Effect of Two-Part Tariffs," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 5(1), pages 47-55.
    • Handle: RePEc:taf:ijecbs:v:5:y:1998:i:1:p:47-55
    DOI: 10.1080/13571519884567
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    References listed on IDEAS

    as
    1. B. Douglas Bernheim & Michael D. Whinston, 1998. "Exclusive Dealing," Journal of Political Economy, University of Chicago Press, vol. 106(1), pages 64-103, February.
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    More about this item

    Keywords

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    JEL classification:

    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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