Friday, May 29, 2015

Price Discrimination in Asymmetric Industries: Implications for Competition and Welfare

Hinnerk Gnutzmann (Universita Cattolica del Sacro Cuore) discusses Price Discrimination in Asymmetric Industries: Implications for Competition and Welfare.

ABSTRACT: Price discrimination by consumer's purchase history is widely used in regulated industries, such as communication or utilities, both by incumbents and entrants. I show that such discrimination can have surprisingly negative welfare effects even though prices and industry profits fall, so does consumer surplus. Earlier studies that did not allow entrants to discriminate or assumed symmetric firms yielded sharply different results, the pro{competitive effect of price discrimination are stronger in these settings. Imposing a pricing constraint on incumbent's discrimination leads the entrant to discriminate more heavily, but still improves both consumer and producer welfare.

https://lawprofessors.typepad.com/antitrustprof_blog/2015/05/price-discrimination-in-asymmetric-industries-implications-for-competition-and-welfare-.html

| Permalink

TrackBack URL for this entry:

https://www.typepad.com/services/trackback/6a00d8341bfae553ef01b8d11139f7970c

Listed below are links to weblogs that reference Price Discrimination in Asymmetric Industries: Implications for Competition and Welfare :

Comments

Post a comment