Antitrust & Competition Policy Blog

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

Wednesday, October 11, 2017

Cournot Oligopoly, Price Discrimination and Total Output

Inaki Aguirre studies Cournot Oligopoly, Price Discrimination and Total Output.

ABSTRACT: This paper extends the traditional analysis of the output effect under monopoly (third-degree) price discrimination to a multimarket Cournot oligopoly. Under symmetric Cournot oligopoly (all firms selling in all markets) similar results to those under monopoly are obtained: in order for price discrimination to increase total output the demand and inverse demand of the strong market (the high price market) should be, as conjectured by Robinson (1933), more concave than the demand and inverse demand of the weak market (the low price one). When competitive pressure (measured by the number of firms) varies across markets the effect of price discrimination on total output crucially depends on what market, the strong or the weak, is more competitive.

http://lawprofessors.typepad.com/antitrustprof_blog/2017/10/cournot-oligopoly-price-discrimination-and-total-output.html

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