Exclusionary Pricing and Rebates When Scale Matters
We consider an incumbent firm and a more efficient entrant, both offering a network good to several asymmetric buyers. The incumbent disposes of an installed base, while the entrant has a network of size zero at the outset, and needs to attract a critical mass of buyers to operate. We analyze different price schemes (uniform pricing, implicit price discrimination - or rebates, explicit price discrimination) and show that the schemes which - for given market structure - induce lower equilibrium prices are also those under which the incumbent is more likely to exclude the rival.
|Date of creation:||2007|
|Contact details of provider:|| Postal: Badia Fiesolana, Via dei Roccettini, 9, 50014 San Domenico di Fiesole (FI) Italy|
Web page: http://www.eui.eu/ECO/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- John Vickers, 2005. "Abuse of Market Power," Economic Journal, Royal Economic Society, vol. 115(504), pages 244-261, 06.
- Innes, Robert & Sexton, Richard J., 1993. "Customer coalitions, monopoly price discrimination and generic entry deterrence," European Economic Review, Elsevier, vol. 37(8), pages 1569-1597, December.
- B. Douglas Bernheim & Michael D. Whinston, 1996.
NBER Working Papers
5666, National Bureau of Economic Research, Inc.
- Bernheim, B.D., 1992. "Exclusive Dealing," Harvard Institute of Economic Research Working Papers 1622, Harvard - Institute of Economic Research.
- B. Douglas Bernheim & Michael D. Whinston, "undated". "Exclusive Dealing," Working Papers 96008, Stanford University, Department of Economics.
- Crémer, Jacques & Rey, Patrick & Tirole, Jean, 1999.
"Connectivity in the Commercial Internet,"
IDEI Working Papers
87, Institut d'Économie Industrielle (IDEI), Toulouse, revised 2000.
- Armstrong, Mark & Vickers, John, 1993.
"Price Discrimination, Competition and Regulation,"
Journal of Industrial Economics,
Wiley Blackwell, vol. 41(4), pages 335-359, December.
- Farrell, Joseph & Klemperer, Paul, 2006.
"Coordination and Lock-In: Competition with Switching Costs and Network Effects,"
Competition Policy Center, Working Paper Series
qt9n26k7v1, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
- Farrell, Joseph & Klemperer, Paul, 2007. "Coordination and Lock-In: Competition with Switching Costs and Network Effects," Handbook of Industrial Organization, Elsevier.
- Farrell, Joseph & Klemperer, Paul, 2006. "Coordination and Lock-In: Competition with Switching Costs and Network Effects," CEPR Discussion Papers 5798, C.E.P.R. Discussion Papers.
- Joseph Farrell & Paul Klemperer, 2006. "Co-ordination and Lock-in: Competition with Switching Costs and Network Effects," Economics Papers 2006-W07, Economics Group, Nuffield College, University of Oxford.
- Armstrong, Mark, 2006. "Price discrimination," MPRA Paper 4693, University Library of Munich, Germany.
- J. Mark Ramseyer & Eric B. Rasmusen & John Shepard Wiley, 2000.
"Naked Exclusion: Reply,"
American Economic Review,
American Economic Association, vol. 90(1), pages 310-311, March.
- Thisse, J.-F. & Vives, X., 1987.
"On the strategic choice of spatial price policy,"
CORE Discussion Papers
1987008, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Rasmusen, Eric B & Ramseyer, J Mark & Wiley, John S, Jr, 1991. "Naked Exclusion," American Economic Review, American Economic Association, vol. 81(5), pages 1137-1145, December.
- Bruce Kobayashi, 2005. "The Economics of Loyalty Rebates and Antitrust Law in the United States," CPI Journal, Competition Policy International, vol. 1.
- Michael D. Whinston & Ilya R. Segal, 2000. "Naked Exclusion: Comment," American Economic Review, American Economic Association, vol. 90(1), pages 296-309, March.
- Gual, Jordi & Hellwig, Martin F. & Perrot, Anne & Polo, Michele & Rey, Patrick & Schmidt, Klaus M. & Stenbacka, Rune, 2005.
"An Economic Approach to Article 82,"
Discussion Papers in Economics
745, University of Munich, Department of Economics.
- Innes, Robert & Sexton, Richard J, 1994. "Strategic Buyers and Exclusionary Contracts," American Economic Review, American Economic Association, vol. 84(3), pages 566-584, June.
- Chiara Fumagalli & Massimo Motta, 2006.
"Exclusive Dealing and Entry, when Buyers Compete,"
American Economic Review,
American Economic Association, vol. 96(3), pages 785-795, June.
- Aghion, Philippe & Bolton, Patrick, 1987. "Contracts as a Barrier to Entry," American Economic Review, American Economic Association, vol. 77(3), pages 388-401, June.
- Fumagalli, Chiara & Motta, Massimo, 2001. "Buyers' Coordination and Entry," CEPR Discussion Papers 2908, C.E.P.R. Discussion Papers.
When requesting a correction, please mention this item's handle: RePEc:eui:euiwps:eco2007/30. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anne Banks)
If references are entirely missing, you can add them using this form.