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We study the exclusionary properties of nonlinear pricing by dominant firms in a static environment. Optimal price schedules are nonlinear when the rivals’ sensitivity to competitive pressure varies with the “contestable share” of the market. When buyers can dispose of unconsumed units at...
Persistent link: https://www.econbiz.de/10010553075
We adapt the exclusion model of Choné and Linnemer (2014) to reflect the notion that dominant firms are unavoidable trading partners. In particular, we introduce the share of the buyer’s demand that can be addressed by the rival as a new dimension of uncertainty. Nonlinear price-quantity...
Persistent link: https://www.econbiz.de/10010814353
We study the exclusionary properties of nonlinear price-quantity schedules in an Aghion-Bolton style model with elastic demand and product differentiation. We distinguish three regimes depending on whether and how the price of the incumbent good is linked to the quantity purchased from the rival...
Persistent link: https://www.econbiz.de/10010814357