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Fighting collusion by permitting price discrimination

Title data

Helfrich, Magdalena ; Herweg, Fabian:
Fighting collusion by permitting price discrimination.
In: Economics Letters. Vol. 145 (August 2016) . - pp. 148-151.
ISSN 0165-1765
DOI: https://doi.org/10.1016/j.econlet.2016.05.024

Abstract in another language

We investigate the effect of a ban on third-degree price discrimination on the sustainability of collusion. We build a model with two firms that may be able to discriminate between two consumer groups. Two cases are analyzed: (i) Best-response symmetries so that profits in the static Nash equilibrium are higher if price discrimination is allowed. (ii) Best-response asymmetries so that profits in the static Nash equilibrium are lower if price discrimination is allowed. In both price discrimination scenarios, firms’ discount factor has to be higher in order to sustain collusion in grim-trigger strategies than under uniform pricing.

Further data

Item Type: Article in a journal
Refereed: Yes
Keywords: Collusion; Duopoly; Grim-trigger strategies; Third-degree price discrimination
Subject classification: D43; K21; L13; L41 (JEL classification)
Institutions of the University: Faculties > Faculty of Law, Business and Economics > Department of Economics > Chair Economics VIII: International Competition Economics > Chair Economics VIII: International Competition Economics - Univ.-Prof. Dr. Fabian Herweg
Profile Fields > Emerging Fields
Profile Fields > Emerging Fields > Innovation and Consumer Protection
Faculties
Faculties > Faculty of Law, Business and Economics
Faculties > Faculty of Law, Business and Economics > Department of Economics
Faculties > Faculty of Law, Business and Economics > Department of Economics > Chair Economics VIII: International Competition Economics
Profile Fields
Result of work at the UBT: Yes
DDC Subjects: 300 Social sciences
300 Social sciences > 330 Economics
Date Deposited: 01 Feb 2017 07:34
Last Modified: 01 Dec 2017 08:34
URI: https://eref.uni-bayreuth.de/id/eprint/35910