Bertrand Competition with an Asymmetric No‐Discrimination Constraint
University of Antwerp - Department of Economics
KU Leuven, Department Accounting, Finance and Insurance; Centre for Economic Policy Research (CEPR)
Theon Van Dijk
The Journal of Industrial Economics, Vol. 61, Issue 1, pp. 62-83, 2013
Regulators and competition authorities often prevent firms with significant market power, or dominant firms, from practicing price discrimination. The goal of such an asymmetric no‐discrimination constraint is to encourage entry and serve consumers' interests. This constraint prohibits the firm with significant market power from practicing both behaviour‐based price discrimination within the competitive segment and third‐degree price discrimination across the monopolistic and competitive segments. We find that this constraint hinders entry and reduces welfare when the monopolistic segment is small.
Number of Pages in PDF File: 22
Date posted: March 26, 2013
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