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Negative consumer value and loss leading

Stephane Caprice and Shiva Shekhar

No 271, DICE Discussion Papers from University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)

Abstract: Large retailers, competing with smaller stores that carry a narrower range, can exercise market power by pricing below cost some of their products. Below-cost pricing arises as an exploitative device rather than a predatory device (e.g., Chen and Rey, 2012). Unlike standard textbook models, we show that positive consumer value is not required in these frameworks. Large retailers can sell products offering consumers a negative value. We use our insight to revisit some classic issues in vertical relations.

Keywords: multiproduct retailers; loss-leading; negative consumer value (search for similar items in EconPapers)
JEL-codes: L13 L81 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-com, nep-ind, nep-mic and nep-mkt
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