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Strategic delays of delivery, market separation and demand discrimination

Author

Listed:
  • Mitraille, Sebastien

    (University of Bristol)

  • Eric Avenel

Abstract

We show that an adequate choice of delays to deliver a durable good allows a monopoly to reduce competition between his two retailers on two different markets. Instead of preventing each retailer from selling on both markets, the producer separates the markets by directing the choices of consumers between the retailers. The consumer whose willingness to pay is the lowest obtains the good later than the other, and both pay their highest valuations for the good: the producer perfectly discriminates the demand. The European car market where producers try to restrict competition between retailers is an application of our findings.

Suggested Citation

  • Mitraille, Sebastien & Eric Avenel, 2003. "Strategic delays of delivery, market separation and demand discrimination," Royal Economic Society Annual Conference 2003 155, Royal Economic Society.
    • Handle: RePEc:ecj:ac2003:155
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    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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