This paper studies the welfare effects of wholesale price discrimination between downstream firms operating under different regulatory systems. I model a monopolistic intermediate good market in which production cost differences between downstream firms may be due to regulatory or technological...

The aim of this reply to Bertoletti [this Journal, this issue] is to give a 'rational expectations' rationale for the demand system and the definition of consumer surplus in Adachi [this Journal, 50, p. 235]

This paper analyses a model of vertical product differentiation with one incumbent and one entrant firm. It is shown that if firms can produce only one quality level welfare in this entry game can be lower than in monopoly. This is the case if qualities are strategic complements because the...