Exclusionary Pricing and Rebates When Scale Matters

Massimo Motta () and Liliane Giardino-Karlinger

No 6258, CEPR Discussion Papers from Centre for Economic Policy Research

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 a higher level of welfare are also those under which the incumbent is more likely to exclude the rival.

Keywords: Abuse of dominance; Exclusionary practices; Network industry; Price discrimination; Rebates (search for similar items in EconPapers)
JEL-codes: L11 L14 L42 (search for similar items in EconPapers)
Date: 2007-04
New Economics Papers: this item is included in nep-com, nep-ind, nep-mic and nep-net
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Working Paper: Exclusionary Pricing and Rebates When Scale Matters (2007)
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