The Pro-competitive Effect of Two-Part Tariffs

Tommy Staahl Gabriel and Lars Sørgard

International Journal of the Economics of Business, 1998, vol. 5, issue 1, 47-55

Abstract: Two producers delegate sales of differentiated products to common retailers, each with a monopoly position. Each producer can offer either a linear or a two-part tariff. In the single-period game each producer's dominant strategy is to use a two-part tariff. If the two producers' products are sufficiently close substitutes and the discount factor is sufficiently high, both producers offering linear tariffs can be sustained as an equilibrium outcome in an infinitely repeated game.

Keywords: Delegation; Common Retailers; Vertical Restraints; Pricing Schemes (search for similar items in EconPapers)
Date: 1998
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Working Paper: The Pro-Competitive Effect of Two-Part Tariffs (1998)
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DOI: 10.1080/13571519884567

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