Successive Oligopolies with Differentiated Firms and Endogeneous Entry

Markus Reisinger and Monika Schnitzer ()

Munich Reprints in Economics from University of Munich, Department of Economics

Abstract: We develop a model of successive oligopolies with endogenous entry, allowing for varying degrees of product differentiation and entry costs in both markets. We show that downstream conditions dominate the overall profitability of the two-tier structure while upstream conditions mainly affect the distribution of profits. We analyze how two-part tariffs and resale price maintenance shape the endogenous market structure and study their welfare effects. In contrast to previous literature, we find that welfare under linear prices can be larger than under twopart tariffs although the latter avoids double marginalization. This is because linear prices induce more downstream market entry.

Date: 2012
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Citations: View citations in EconPapers (10)

Published in Journal of Industrial Economics 4 60(2012): pp. 537-577

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Journal Article: Successive Oligopolies with Differentiated Firms and Endogeneous Entry (2012)
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