Third-Degree Price Discrimination in Oligopoly: All-Out Competition and Strategic Commitment
Year: 1998
Type: article
Abstract: Price discrimination by imperfectly competitive firms may intensify competition, leading to lower prices for all consumers; the tradeoff of consumer groups' welfare that is characteristic of monopolistic discrimination need not arise. This escalation of competition may make firms worse off, and as a result firms may wish to avoid the discriminatory outcome. Under conditions similar to those in which unambiguous price and welfare effects may arise, unilateral commitments not to price discriminate - including the adoption of everyday low pricing or no-haggle policies - may raise firm profits by softening price competition.
Source: The RAND Journal of Economics
DOI: 10.2307/2555890
Author: Kenneth S. Corts
Institution: Harvard University
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2000673246