Posted by D. Daniel Sokol
Krina Griva (Ioannina) and Nikos Vetas (Athens University of Economics and Business) provide thoughts On two-part tariff competition in a homogeneous product duopoly.
ABSTRACT: We explore the nature of two-part tariff competition between duopolists providing a homogeneous service when consumers differ with respect to their usage rates. Competition in only one price component (the fixed fee or the rate) may allow both firms to enjoy positive profits if the other price component has been set at levels different enough for each firm. Endogenous market segmentation emerges, with the heavier users choosing the lower rate firm and the lighter users choosing the lower fee firm. We therefore characterize how fixing one price component indirectly introduces an element of product differentiation to an otherwise homogeneous product market. We also examine the crucial role that non-negativity constraints play for the nature of market equilibrium.
Featured News
Senator Warner Calls for Treasury Oversight on Big Tech Sanctions
Jan 29, 2024 by
CPI
Canada’s Industry Minister Targets Grocery Giants with Antitrust Changes
Jan 29, 2024 by
CPI
DOT Issues Provisional Ruling Ending Delta-Aeroméxico Partnership
Jan 29, 2024 by
CPI
US Targets China with Proposed Rules on Cloud Giants in AI Development
Jan 29, 2024 by
CPI
Australia’s ACCC Finds Limited Evidence of Profiteering in Childcare Sector Despite Soaring Fees
Jan 29, 2024 by
CPI
Antitrust Mix by CPI
Antitrust Chronicle® – The Rule(s) of Reason
Jan 29, 2024 by
CPI
Evolving the Rule of Reason for Legacy Business Conduct
Jan 29, 2024 by
CPI
The Object Identity
Jan 29, 2024 by
CPI
In Praise of Rules-Based Antitrust
Jan 29, 2024 by
CPI
The Future of State AG Antitrust Enforcement and Federal-State Cooperation
Jan 29, 2024 by
CPI