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Rey, Patrick
and Tirole, Jean
(2019)
Price caps as welfare-enhancing coopetition.
Journal of Political Economy, vol. 127 (n° 6).
pp. 3018-3069.
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Abstract
The paper analyzes the impact of price caps agreed upon by industry participants. Price caps, like mergers, allow firms to solve Cournot's multiple marginalization problem; but unlike mergers, they do not stifle price competition in case of substitutes or facilitate foreclosure in case of complements. The paper first demonstrates this for non-repeated interaction and general demand and cost functions. It then shows that allowing price caps has no impact on investment and entry in case of substitutes. Under more restrictive assumptions, the paper finally generalizes the insights to repeated price interaction, analyzing coordinated effects when goods are not necessarily substitutes.
| Item Type: | Article |
|---|---|
| Language: | English |
| Date: | December 2019 |
| Refereed: | Yes |
| Additional Information: | En cours ks 12/09 |
| Uncontrolled Keywords: | Price caps, information-light regulation, tacit collusion, complements and substitutes, mergers, foreclosure, joint marketing agreements, coopetition |
| JEL Classification: | D43 - Oligopoly and Other Forms of Market Imperfection L24 - Contracting Out; Joint Ventures; Technology Licensing L41 - Monopolization; Horizontal Anticompetitive Practices O34 - Intellectual Property Rights - National and International Issues |
| Subjects: | B- ECONOMIE ET FINANCE |
| Divisions: | TSE-R (Toulouse) |
| Site: | UT1 |
| Date Deposited: | 22 Jun 2018 15:30 |
| Last Modified: | 12 Sep 2024 08:28 |
| OAI Identifier: | oai:tse-fr.eu:32736 |
| URI: | https://publications.ut-capitole.fr/id/eprint/26096 |
Available Versions of this Item
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Price Caps as Welfare-Enhancing Coopetition. (deposited 09 Jul 2014 17:39)
- Price caps as welfare-enhancing coopetition. (deposited 22 Jun 2018 15:30) [Currently Displayed]
