COMPETITION CAN HARM CONSUMERS *

Simon Cowan and Xiangkang Yin

Australian Economic Papers, 2008, vol. 47, issue 3, pages 264-271

Abstract: Duopolists selling differentiated products can generate less consumer surplus than a monopoly selling one of the products. In a Hotelling-type model where a monopoly supplies more than half of potential consumers, but not all, entry by a rival leads to a duopoly price that is higher than the monopoly price. Consumers in aggregate will be made worse off by such entry when the effect of the price increase outweighs the benefit of extra variety. When consumers have continuous demand functions and firms use two-part tariffs, duopoly can also result in lower aggregate consumer surplus than monopoly. Copyright 2008 The Authors. Journal compilation 2008 Blackwell Publishing Ltd/University of Adelaide and Flinders University.

Date: 2008
View citations in EconPapers

Downloads: (external link)
http://www.blackwell-synergy.com/links/doi/10.1111/j.1467-8454.2008.00347.x link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:bla:ausecp:v:47:y:2008:i:3:p:264-271

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0004-900X

Access Statistics for this article

Australian Economic Papers is edited by Daniel Leonard

More articles in Australian Economic Papers from Blackwell Publishing
Series data maintained by Christopher F. Baum ().