Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

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Wednesday, July 31, 2013

Cournot is more competitive than Bertrand Upstream Monopoly with Two-part Tariffs

Posted by D. Daniel Sokol

Maria Alipranti (University of Crete) and Emmanuel Petrakis (Department of Economics, University of Crete, Greece) argue that Cournot is more competitive than Bertrand Upstream Monopoly with Two-part Tariffs.

ABSTRACT: The present paper compares the Cournot and Bertrand equilibrium outcomes and social welfare in vertically related markets with upstream monopolistic market structure, where the trade between the upstream monopolist and the downstream firms is conducted via two-part tariffs contracts. We show that the equilibrium quantities, the profits of the downstream firms, the consumers' surplus and the social welfare are always higher under Cournot final market competition than under Bertrand final market competition. On the contrary the equilibrium profits of the upstream monopolist under Bertrand market competition always exceed those obtained under Cournot market competition.

http://lawprofessors.typepad.com/antitrustprof_blog/2013/07/cournot-is-more-competitive-than-bertrand-upstream-monopoly-with-two-part-tariffs-.html

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