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Global vs.Local Competition

  • Patrick Legros
  • Konrad Stahl

We analyze the impact of increased outside opportunities brought to consumers by improved access to a global market on local mar- ket performance under monopoly vs. oligopoly. If consumers choose once where to buy, we show that under all forms of organizing the local market, increased competition from the global market will lo- cally crowd out variety. The e ect on prices is much less clear. While increased global competition yields a price reduction under monopoly, prices may increase under oligopoly. We check the robustness of these results in various extensions and draw consequences on competition and industrial policies.

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File URL: http://www.dnb.nl/binaries/sr097_tcm46-146874.pdf
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Paper provided by Netherlands Central Bank in its series DNB Staff Reports (discontinued) with number 97.

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Length: 41 pages
Date of creation: 2003
Date of revision:
Handle: RePEc:dnb:staffs:97
Contact details of provider: Postal: Postbus 98, 1000 AB Amsterdam
Web page: http://www.dnb.nl/en/

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  1. S. P. Anderson & A. de Palma, 1997. "From local to global competition," THEMA Working Papers 97-10, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  2. Aghion, Philippe & Dewatripont, Mathias & Rey, Patrick, 1999. "Competition, Financial Discipline and Growth," Review of Economic Studies, Wiley Blackwell, vol. 66(4), pages 825-52, October.
  3. Schmidt, Klaus M., 1997. "Managerial Incentives and Product Market Competition," Munich Reprints in Economics 19772, University of Munich, Department of Economics.
  4. Boccard, Nicolas & Legros, Patrick, 2002. "Audit Competition in Insurance Oligopolies," CEPR Discussion Papers 3478, C.E.P.R. Discussion Papers.
  5. Bouckaert, Jan, 2000. "Monopolistic competition with a mail order business," Economics Letters, Elsevier, vol. 66(3), pages 303-310, March.
  6. Sridhar Balasubramanian, 1998. "Mail versus Mall: A Strategic Analysis of Competition between Direct Marketers and Conventional Retailers," Marketing Science, INFORMS, vol. 17(3), pages 181-195.
  7. Mathias Dewatripont & Philippe Aghion & Patrick Rey, 1997. "Corporate governance, competition policy and industrial policy," ULB Institutional Repository 2013/9613, ULB -- Universite Libre de Bruxelles.
  8. Armstrong, Mark & Vickers, John, 2001. "Competitive Price Discrimination," RAND Journal of Economics, The RAND Corporation, vol. 32(4), pages 579-605, Winter.
  9. Michael R. Baye & John Morgan, 2001. "Information Gatekeepers on the Internet and the Competitiveness of Homogeneous Product Markets," American Economic Review, American Economic Association, vol. 91(3), pages 454-474, June.
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