A Note on the Adverse Effect of Competition on Consumers
It is usually believed that higher competition, implying more active firms, benefits consumers. We show that this may not be the case in an industry with asymmetric cost firms. A rise in the number of more cost-inefficient firms makes the consumers worse off in the presence of a welfare-maximizing tax/subsidy policy. A rise in the number of more cost-inefficient firms also reduces social welfare.
Year of publication: |
2014
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Authors: | DINDA, SOUMYANANDA ; MUKHERJEE, ARIJIT |
Published in: |
Journal of Public Economic Theory. - Association for Public Economic Theory - APET, ISSN 1097-3923. - Vol. 16.2014, 1, p. 157-163
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Publisher: |
Association for Public Economic Theory - APET |
Saved in:
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