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Price vs. quantity competition in a vertically related market

Maria Alipranti, Chrysovalantou Milliou () and Emmanuel Petrakis ()

Economics Letters, 2014, vol. 124, issue 1, 122-126

Abstract: This paper demonstrates that the standard conclusions regarding the comparison of Cournot and Bertrand competition are reversed in a vertically related market with upstream monopoly and trading via two-part tariffs. In such a market, downstream Cournot competition yields higher output, lower wholesale prices, lower final prices, higher consumers’ surplus, and higher total welfare than Bertrand competition.

Keywords: Cournot; Bertrand; Vertical relations; Two-part tariffs (search for similar items in EconPapers)
JEL-codes: D43 L13 L14 (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1016/j.econlet.2014.05.002

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