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Price Discrimination in Input Markets : Quantity Discounts and Private Information

Title data

Herweg, Fabian ; Müller, Daniel:
Price Discrimination in Input Markets : Quantity Discounts and Private Information.
In: Economic Journal. Vol. 124 (2014) Issue 577 . - pp. 776-804.
ISSN 1468-0297
DOI: https://doi.org/10.1111/ecoj.12061

Official URL: Volltext

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Abstract in another language

We consider a monopolistic supplier's optimal choice of wholesale tariffs when downstream firms are privately informed about their retail costs. Under discriminatory pricing, downstream firms that differ in their ex ante distribution of retail costs are offered different tariffs. Under uniform pricing, the same wholesale tariff is offered to all downstream firms. In contrast to the extant literature on price discrimination with non-linear wholesale tariffs, we find that banning discriminatory wholesale contracts often improves welfare. This also holds if the manufacturer is not an unconstrained monopolist. Moreover, uniform pricing increases downstream investments in cost reduction in the long run.

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 09:31
Last Modified: 01 Dec 2017 08:06
URI: https://eref.uni-bayreuth.de/id/eprint/6676