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Cournot Oligopoly, Price Discrimination and Total Output

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  • Aguirre, Iñaki

Abstract

This paper extends the traditional analysis of the output effect under monopoly (third-degree) price discrimination to a multimarket Cournot oligopoly. Under symmetric Cournot oligopoly (all firms selling in all markets) similar results to those under monopoly are obtained: in order for price discrimination to increase total output the demand and inverse demand of the strong market (the high price market) should be, as conjectured by Robinson (1933), more concave than the demand and inverse demand of the weak market (the low price one). When competitive pressure (measured by the number of firms) varies across markets the effect of price discrimination on total output crucially depends on what market, the strong or the weak, is more competitive.

Suggested Citation

  • Aguirre, Iñaki, 2017. "Cournot Oligopoly, Price Discrimination and Total Output," MPRA Paper 80166, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:80166
    as

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    File URL: https://mpra.ub.uni-muenchen.de/80166/1/MPRA_paper_80166.pdf
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    References listed on IDEAS

    as
    1. Armstrong, Mark & Vickers, John, 2016. "Multiproduct Pricing Made Simple," MPRA Paper 68717, University Library of Munich, Germany.
    2. Takanori Adachi & Noriaki Matsushima, 2014. "The Welfare Effects Of Third-Degree Price Discrimination In A Differentiated Oligopoly," Economic Inquiry, Western Economic Association International, vol. 52(3), pages 1231-1244, July.
    3. Aguirre Iñaki, 2016. "On the Economics of the “Meeting Competition Defense” Under the Robinson–Patman Act," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(3), pages 1213-1238, September.
    4. Aguirre Pérez, Iñaki, 2009. "Joan Robinson Was Almost Right: Output under Third-Degree Price Discrimination," IKERLANAK 2009-38, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
    5. Iñaki Aguirre & Simon Cowan & John Vickers, 2010. "Monopoly Price Discrimination and Demand Curvature," American Economic Review, American Economic Association, vol. 100(4), pages 1601-1615, September.
    6. Aguirre, Inaki, 2000. "The Most-Favoured-Customer Pricing Policy and Competitive Advantage," Bulletin of Economic Research, Wiley Blackwell, vol. 52(3), pages 215-223, July.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Third-Degree Price Discrimination; Output; Oligopoly; Welfare.;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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