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Price Discrimination in Input Markets : Downstream Entry and Efficiency

Title data

Herweg, Fabian ; Müller, Daniel:
Price Discrimination in Input Markets : Downstream Entry and Efficiency.
In: Journal of Economics & Management Strategy. Vol. 21 (2012) Issue 3 . - pp. 773-799.
ISSN 1530-9134
DOI: https://doi.org/10.1111/j.1530-9134.2012.00344.x

Official URL: Volltext

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Abstract in another language

The extant theory on price discrimination in input markets takes the structure of the downstream industry as exogenously given. This paper endogenizes the structure of the downstream industry and examines the effects of permitting third-degree price discrimination on market structure and welfare. We identify situations where permitting price discrimination leads to either higher or lower wholesale prices for all downstream firms. These findings are driven by upstream profits being discontinuous due to costly entry. Moreover, permitting price discrimination fosters entry which often improves welfare. Nevertheless, entry can also reduce welfare because it may lead to a severe inefficiency in production.

Further data

Item Type: Article in a journal
Refereed: Yes
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 09:15
Last Modified: 01 Dec 2017 06:58
URI: https://eref.uni-bayreuth.de/id/eprint/6670