Exclusionary Pricing and Rebates When Scale Matters

Liliane Giardino-Karlinger () and Massimo Motta ()

No ECO2007/30, Economics Working Papers from European University Institute

Abstract: We consider an incumbent firm and a more efficient entrant, both offering a network good to several asymmetric buyers. The incumbent disposes of an installed base, while the entrant has a network of size zero at the outset, and needs to attract a critical mass of buyers to operate. We analyze different price schemes (uniform pricing, implicit price discrimination - or rebates, explicit price discrimination) and show that the schemes which - for given market structure - induce lower equilibrium prices are also those under which the incumbent is more likely to exclude the rival.

JEL-codes: L11 L14 L42 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ind, nep-mic and nep-net
Date: 2007
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