Bertrand Competition with an Asymmetric No‐Discrimination Constraint

22 Pages Posted: 26 Mar 2013  

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: March 2013

Abstract

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.

Suggested Citation

Bouckaert, Jan and Degryse, Hans and Dijk, Theon van, Bertrand Competition with an Asymmetric No‐Discrimination Constraint (March 2013). The Journal of Industrial Economics, Vol. 61, Issue 1, pp. 62-83, 2013. Available at SSRN: https://ssrn.com/abstract=2239531 or http://dx.doi.org/10.1111/joie.12011

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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