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The Pro-Competitive Effect of Two-Part Tariffs

Tommy Gabrielsen () and Lars Sørgard ()

Norway; Department of Economics, University of Bergen from Department of Economics, University of Bergen

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: PRICING; GAMES (search for similar items in EconPapers)
JEL-codes: L42 L10 (search for similar items in EconPapers)
Pages: 12 pages
Date: 1998
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More papers in Norway; Department of Economics, University of Bergen from Department of Economics, University of Bergen Department of Economics, University of Bergen Fosswinckels Gate 6. N-5007 Bergen, Norway. Contact information at EDIRC.
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