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- Title
The welfare effects of third-degree price discrimination in intermediate good markets: the case of bargaining.
- Authors
O'Brien, Daniel P.
- Abstract
This article examines the welfare effects of third-degree price discrimination by a monopolist selling to downstream firms with bargaining power. One of the downstream firms (the 'chain store') can integrate backward at lower cost than rivals. Bargaining powers also depend on disagreement profits, bargaining weights, and concession costs. If the chain's integration threat is not credible, price discrimination reduces the input price charged symmetric downstream firms and often reduces the average input price charged asymmetric downstream firms.
- Subjects
BARGAINING power; PRICE discrimination; CHAIN stores; CONCESSION bargaining; PROFIT; MONOPOLISTIC competition
- Publication
RAND Journal of Economics (Wiley-Blackwell), 2014, Vol 45, Issue 1, p92
- ISSN
0741-6261
- Publication type
Article
- DOI
10.1111/1756-2171.12043