Price discrimination and sequential contracting in monopolistic input markets

Hyunchul Kim and Seung-Gyu Sim

Economics Letters, 2015, vol. 128, issue C, 39-42

Abstract: This paper examines the welfare implication of banning price discrimination in the intermediate goods market in which a monopolistic supplier contracts with asymmetric downstream retailers. We demonstrate that the supplier has a strong incentive to manipulate the interdependent demand structure through sequential contracting whether price discrimination is banned or not, and allowing price discrimination improves social welfare and consumer surplus when sequential contracting is implemented by the supplier.

Keywords: Monopolistic input market; Price discrimination; Sequential contracting (search for similar items in EconPapers)
JEL-codes: D43 L14 L42 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:128:y:2015:i:c:p:39-42

DOI: 10.1016/j.econlet.2015.01.011

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