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Relaxing Competition Through Quality Differentiation and Price Discrimination

Title data

Herweg, Fabian:
Relaxing Competition Through Quality Differentiation and Price Discrimination.
In: Journal of Economics. Vol. 106 (May 2012) Issue 1 . - pp. 1-26.
ISSN 1617-7134
DOI: https://doi.org/10.1007/s00712-011-0232-x

Official URL: Volltext

Abstract in another language

In this paper, I compare two-part tariff competition to linear pricing in a vertically differentiated duopoly. Consumers have identical tastes for quality but differ in their preferences for quantity. The main finding is that quality differentiation occurs in equilibrium if and only if two-part tariffs are feasible. Furthermore, two-part tariff competition encourages entry, which in turn increases welfare. Nevertheless, two-part tariff competition decreases consumer surplus compared to linear pricing.

Further data

Item Type: Article in a journal
Refereed: Yes
Keywords: Duopoly; Linear pricing; Two-part tariff; Vertical differentiation
Subject classification: JEL D43 L11 L13
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 > 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
Profile Fields > Emerging Fields
Result of work at the UBT: No
DDC Subjects: 300 Social sciences > 330 Economics
Date Deposited: 11 Feb 2015 08:45
Last Modified: 01 Dec 2017 06:58
URI: https://eref.uni-bayreuth.de/id/eprint/6669