Price Discrimination in Quantity Setting Oligopoly

24 Pages Posted: 6 Jun 2016

See all articles by Rajnish Kumar

Rajnish Kumar

Queen's University Management School

Levent Kutlu

University of Texas Rio Grande Valley

Date Written: July 2016

Abstract

We analyze a two‐stage quantity setting oligopolistic price discrimination game. In the first stage, firms choose capacities and in the second stage they simultaneously choose the share that they assign to each segment. At the equilibrium, the firms focus more on the high‐valuation customers. When the capacities in the first stage are endogenous, the deadweight loss does not vanish with the level of price discrimination, as it does in one‐stage games and monopoly. Moreover, the quantity‐weighted average price increases with the level of price discrimination as opposed to the established results in the literature for one‐stage games.

Suggested Citation

Kumar, Rajnish and Kutlu, Levent, Price Discrimination in Quantity Setting Oligopoly (July 2016). The Manchester School, Vol. 84, Issue 4, pp. 482-505, 2016, Available at SSRN: https://ssrn.com/abstract=2790389 or http://dx.doi.org/10.1111/manc.12106

Rajnish Kumar (Contact Author)

Queen's University Management School ( email )

25 University Square
Belfast, Northern Ireland BT7 1NN
Northern Ireland

Levent Kutlu

University of Texas Rio Grande Valley ( email )

1201 West University Dr
Edinburg, TX TX 78539
United States

HOME PAGE: http://https://faculty.utrgv.edu/levent.kutlu/

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