Input Price Discrimination with Downstream Cournot Competitors

Tommaso Valletti

No 3570, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This Paper addresses the question of third-degree price discrimination in input markets. I propose a solution that relies on a method that decomposes the upstream monopolist?s profit into two parts, one that depends on average input prices, and one that depends on their distribution. I am able to obtain rather general results, and, in the linear demand case, I obtain a full characterization of the equilibria in the two regimes of price discrimination and price uniformity, generalizing the findings of Yoshida (2000). Under reasonable assumptions, input price discrimination negatively affects both consumer surplus and total welfare.

Keywords: Input; price; discrimination (search for similar items in EconPapers)
JEL-codes: L42 (search for similar items in EconPapers)
Date: 2002-10
New Economics Papers: this item is included in nep-mic
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Citations: View citations in EconPapers (1)

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Journal Article: Input price discrimination with downstream Cournot competitors (2003)
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