This paper studies differential pricing by an upstream monopolist whose cost to supply the intermediate good differs across buyers in the downstream. It is shown that, different from third degree price discrimination based on the downstream firms' cost of transforming the intermediate good into...

This paper studies third degree price discrimination in a monopolistically competitive market. When the number of firms is fixed, price discrimination raises firm profit and reduces consumer welfare relative to uniform pricing. In the long run, the equilibrium product variety under price...

Antitrust laws in many countries prohibit the setting of differential prices across buyers who compete against each other. In this paper, we consider a setting in which a downstream manufacturer holds non-controlling stakes in its rival and both buy input from an unptream monopolist. We find...