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Input Price Discrimination, Access Pricing, and Bypass

  • Ngo Van Long
  • Antoine Soubeyran

This paper explores several aspects of the vertical relationship between an upstream firm and a number of downstream firms that are Cournot rivals relying on the inputs provided by the upstream firm. We address the following questions: (i) if the upstream firm can charge different prices to different downstream firms, will it charge higher prices to more efficient firms? (ii) if the upstream firm can provide different levels of quality of access to several ex ante identical downstream firms, will it provide a uniform quality of access? The answer to (i) depends on whether downstream firms can self-supply. As for (ii), we show that equals may be treated unequally. Nous examinons le problème des relations verticales. Quand un fournisseur discrimine, est-ce qu'il impose aux firmes à coût marginal plus bas un prix de l'input plus haut que celui qu'il impose aux firmes à coût marginal plus haut? Nous montrons que cela dépend de la capacité des firmes aval à partiellement produire l'input. Nous fournissons aussi une formule de charge d'accès dans le cas où les firmes aval sont des compétiteurs à la Cournot non identiques. Finalement, nous développons un modèle de discrimination par la qualité d'un input, et nous montrons que la firme amont peut trouver profitable de traiter différemment des firmes identiques.

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Paper provided by CIRANO in its series CIRANO Working Papers with number 99s-23.

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Length: 32 pages
Date of creation: 01 Jun 1999
Date of revision:
Handle: RePEc:cir:cirwor:99s-23
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  1. Gaudet, Gerard & Salant, Stephen W, 1991. "Uniqueness of Cournot Equilibrium: New Results from Old Methods," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 399-404, April.
  2. Van Long, N. & Soubeyran, A., 1997. "Cost Manipulation in Oligopoly: A Duality Approach," ASSET - Instituto De Economia Publica 174, ASSET (Association of Southern European Economic Theorists).
  3. DeGraba, Patrick, 1990. "Input Market Price Discrimination and the Choice of Technology," American Economic Review, American Economic Association, vol. 80(5), pages 1246-53, December.
  4. Ngo Van Long & Antoine Soubeyran, 1999. "Cost Manipulation Games in Oligopoly, with Costs of Manipulating," CIRANO Working Papers 99s-13, CIRANO.
  5. Armstrong, Mark & Doyle, Chris & Vickers, John, 1996. "The Access Pricing Problem: A Synthesis," Journal of Industrial Economics, Wiley Blackwell, vol. 44(2), pages 131-50, June.
  6. Long, N.V. & Soubeyran, A., 1998. "Cost Manipulation in an Asymmetric Oligopoly: The Taxation Problem," G.R.E.Q.A.M. 98a25, Universite Aix-Marseille III.
  7. Katz, Michael L, 1987. "The Welfare Effects of Third-Degree Price Discrimination in," American Economic Review, American Economic Association, vol. 77(1), pages 154-67, March.
  8. Vickers, John, 1995. "Competition and Regulation in Vertically Related Markets," Review of Economic Studies, Wiley Blackwell, vol. 62(1), pages 1-17, January.
  9. Marcel Boyer, 1999. "Les Expos, l'OSM, les universités, les hôpitaux : Le coût d'un déficit de 400 000 emplois au Québec = Expos, Montreal Symphony Orchestra, Universities, Hospitals: The Cost of a 400,000-Job Shortfall i," CIRANO Papers 99c-01, CIRANO.
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