Bertrand Competition with an Asymmetric No-Discrimination Constraint

24 Pages Posted: 1 Feb 2012  

Jan Bouckaert

University of Antwerp - Department of Economics

Hans Degryse

KU Leuven, Department Accounting, Finance and Insurance; Centre for Economic Policy Research (CEPR)

Theon van Dijk

Lexonomics

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Date Written: January 18, 2012

Abstract

We study the competitive and welfare consequences when only one …firm must commit to uniform pricing while the competitor's pricing policy is left unconstrained. The asymmetric no-discrimination constraint prohibits both behavior-based price discrimination within the competitive segment and third-degree price discrimination across the monopolistic and competitive segments. We …find that an asymmetric no-discrimination constraint only leads to higher profi…ts for the unconstrained …firm if the monopolistic segment is large enough. Therefore, a regulatory policy objective of encouraging entry is not served by an asymmetric no-discrimination constraint if the monopolistic segment is small. Only when the monopolistic segment is small and rivalry exists in the competitive segment does the asymmetric no-discrimination constraint enhance welfare.

JEL Classification: D11

Suggested Citation

Bouckaert, Jan and Degryse, Hans and Dijk, Theon van, Bertrand Competition with an Asymmetric No-Discrimination Constraint (January 18, 2012). Available at SSRN: https://ssrn.com/abstract=1996428 or http://dx.doi.org/10.2139/ssrn.1996428

Jan Bouckaert (Contact Author)

University of Antwerp - Department of Economics ( email )

Prinsstraat 13
Antwerp, B-2000
Belgium
+32 3 220 4055 (Phone)

Hans Degryse

KU Leuven, Department Accounting, Finance and Insurance ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

Theon Van Dijk

Lexonomics ( email )

Grensstraat 81
Brussels, 1970
Belgium

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