Bertrand competition with an asymmetric no-discrimination constraintBertrand competition with an asymmetric no-discrimination constraint
Faculty of Applied Economics
The journal of industrial economics. - Oxford
61(2013):1, p. 62-83
University of Antwerp
Regulators and competition authorities often prevent firms with significant market power, or dominant firms, from practicing price discrimination. The goal of such an asymmetric no-discrimination constraint is to encourage entry and serve consumers' interests. This constraint prohibits the firm with significant market power from practicing both behaviour-based price discrimination within the competitive segment and third-degree price discrimination across the monopolistic and competitive segments. We find that this constraint hinders entry and reduces welfare when the monopolistic segment is small.