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Title
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Bertrand competition with an asymmetric no-discrimination constraint
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Author
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Abstract
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| We study the competitive and welfare consequences when only one firm must commit to uniform pricing while the competitor's pricing policy is left unconstrained. The asymmetric no-discrimination constraint prohibits both behaviour-based price discrimination within the competitive segment and third-degree price discrimination across the monopolistic and competitive segments. We find that an asymmetric no-discrimination constraint only leads to higher profits for the unconstrained firm if the monopolistic segment is large enough. Therefore, a regulatory policy objective of encouraging entry is not served by an asymmetric no-discrimination constraint if the monopolistic segment is small. Only when the monopolistic segment is small and rivalry exists in the competitive segment does the asymmetric no-discrimination constraint enhance welfare. |
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Language
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English
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Source (series)
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Research paper / UA, Faculty of Applied Economics ; 2012:006
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Publication
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Antwerp
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UA
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2012
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Volume/pages
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23 p.
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Full text (open access)
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