Nonlinear Pricing as Exclusionary Conduct

Philippe Choné and Laurent Linnemer

No 2012-11, Working Papers from Center for Research in Economics and Statistics

Abstract: We study the exclusionary properties of nonlinear pricing by dominant firms in a static environment. Optimal price schedules are nonlinear when the rivals' sensitivity to competitive pressure varies with the "contestable share" of the market. When buyers can dispose of unconsumed units at no cost, and thus might purchase units they do not need, dominant firms are prevented from placing too much pressure on rivals, which limits the extent of inefficient exclusion. When disposal costs are large and sensitivity to competitive pressure is not monotonic in the contestable share, optimal price schedules may be locally decreasing and highly nonlinear

Keywords: Inefficient exclusion; buyer opportunism; disposal costs; quantity rebates; incomplete information (search for similar items in EconPapers)
JEL-codes: D82 D86 L12 L42 (search for similar items in EconPapers)
Pages: 56
Date: 2012-06
New Economics Papers: this item is included in nep-bec, nep-com and nep-mic
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Citations: View citations in EconPapers (2)

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