Price Discrimination in Quantity Setting Oligopoly

Rajnish Kumar, Levent Kutlu

Research output: Contribution to journalArticle

4 Citations (Scopus)
430 Downloads (Pure)

Abstract

We analyze a two-stage quantity setting oligopolistic price discrimination game. In the first stage firms choose capacities and in the second stage they simultaneously choose the share that they assign to each segment. At the equilibrium the firms focus more on the high-valuation customers. When the capacities in the first stage are endogenous, the deadweight loss does not vanish with the level of price discrimination, as it does in one-stage games and monopoly. Moreover, the quantity-weighted average price increases with the level of price discrimination as opposed to established results in the literature for one-stage games.
Original languageEnglish
Pages (from-to)482-505
Number of pages24
JournalManchester School
Volume84
Issue number4
Early online date01 Jul 2015
DOIs
Publication statusPublished - Jul 2016

Keywords

  • Price discrimination
  • Oligopoly
  • Cournot competition

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