Input price discrimination (bans), entry and welfare

Markus Dertwinkel-Kalt (), Justus Haucap and Christian Wey

No 99, DICE Discussion Papers from Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)

Abstract: Katz (1987), DeGraba (1990), and Yoshida (2000) have formulated theories that price discrimination bans in intermediary goods markets tend to have positive effects on allocative, dynamic and productive efficiency, respectively. We show that none of these results is robust vis-à-vis endogenous changes in downstream market structure. An upstream monopolist's ability to price discriminate can intensify competition through entry (by a technically inefficient entrant), resulting in socially preferable market outcomes. In contrast, discrimination bans tend to blockade entry of relatively inefficient firms , thereby strengthening downstream market concentration.

JEL-codes: D43 K31 L13 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-com and nep-mic
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Citations: View citations in EconPapers (4)

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