Bertrand competition with an asymmetric no-discrimination constraint

J. Bouckaert, Hans Degryse () and Th. van Dijk

Working Papers from University of Antwerp, Faculty of Applied Economics

Abstract: We study the competitive and welfare consequences when only one firm must commit to uniform pricing while the competitor's pricing policy is left unconstrained. The asymmetric no-discrimination constraint prohibits both behaviour-based price discrimination within the competitive segment and third-degree price discrimination across the monopolistic and competitive segments. We find that an asymmetric no-discrimination constraint only leads to higher profits for the unconstrained firm if the monopolistic segment is large enough. Therefore, a regulatory policy objective of encouraging entry is not served by an asymmetric no-discrimination constraint if the monopolistic segment is small. Only when the monopolistic segment is small and rivalry exists in the competitive segment does the asymmetric no-discrimination constraint enhance welfare.

Date: 2012-02
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Related works:
Working Paper: Bertrand Competition with an Asymmetric No-Discrimination Constraint (2012)
Working Paper: Bertrand Competition with an Asymmetric No-Discrimination Constraint (2012)
Working Paper: Bertrand competition with an asymmetric no-discrimination constraint (2012)
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