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The marginal price effects of antitrust rules against price discrimination

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  • Zenger, Hans

Abstract

The two central pricing rules contained in most antitrust laws are prohibitions of below-cost pricing and prohibitions of discriminatory pricing. This article shows that the rule against discriminatory pricing may actually induce firms to charge exclusionary below-cost prices, even in the complete absence of any predatory intent on the part of firms.

Suggested Citation

  • Zenger, Hans, 2012. "The marginal price effects of antitrust rules against price discrimination," Economics Letters, Elsevier, vol. 117(3), pages 921-923.
    • Handle: RePEc:eee:ecolet:v:117:y:2012:i:3:p:921-923
    DOI: 10.1016/j.econlet.2012.07.017
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    References listed on IDEAS

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    1. Paul Klemperer, 1987. "Markets with Consumer Switching Costs," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 102(2), pages 375-394.
    2. Jean‐Charles Rochet & Jean Tirole, 2006. "Two‐sided markets: a progress report," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 645-667, September.
    3. Armstrong, Mark & Vickers, John, 2001. "Competitive Price Discrimination," RAND Journal of Economics, The RAND Corporation, vol. 32(4), pages 579-605, Winter.
    4. Mark Armstrong & John Vickers, 2010. "Competitive Non-linear Pricing and Bundling," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 77(1), pages 30-60.
    5. Luís Cabral, 2011. "Dynamic Price Competition with Network Effects," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 78(1), pages 83-111.
    6. Png, I P L & Reitman, David, 1995. "Why Are Some Products Branded and Others Not?," Journal of Law and Economics, University of Chicago Press, vol. 38(1), pages 207-224, April.
    7. Jean-Charles Rochet Author-Email:rochet@cict.fr Author-Workplace-Name: IDEI, University of Toulouse & Jean Tirole Author-Email: tirole@cict.fr Author-Workplace-Name: IDEI, University of Toulouse, 2006. "Two-Sided Markets: A Progress Report," RAND Journal of Economics, The RAND Corporation, vol. 37(3), pages 645-667, Autumn.
    8. Klemperer, Paul D, 1987. "Entry Deterrence in Markets with Consumer Switching Costs," Economic Journal, Royal Economic Society, vol. 97(388a), pages 99-117, Supplemen.
    9. Stole, Lars A., 2007. "Price Discrimination and Competition," Handbook of Industrial Organization, in: Mark Armstrong & Robert Porter (ed.), Handbook of Industrial Organization, edition 1, volume 3, chapter 34, pages 2221-2299, Elsevier.
    10. Damien Geradin & Nicolas Petit, 2006. "Price Discrimination Under Ec Competition Law: Another Antitrust Doctrine In Search Of Limiting Principles?," Journal of Competition Law and Economics, Oxford University Press, vol. 2(3), pages 479-531.
    11. Drew Fudenberg & Jean Tirole, 1983. "Learning-by-Doing and Market Performance," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 522-530, Autumn.
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    Cited by:

    1. Peter Seele & Claus Dierksmeier & Reto Hofstetter & Mario D. Schultz, 2021. "Mapping the Ethicality of Algorithmic Pricing: A Review of Dynamic and Personalized Pricing," Journal of Business Ethics, Springer, vol. 170(4), pages 697-719, May.

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    More about this item

    Keywords

    Price discrimination; Personalized pricing; Antitrust pricing rules; Non-linear pricing;
    All these keywords.

    JEL classification:

    • K2 - Law and Economics - - Regulation and Business Law
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L4 - Industrial Organization - - Antitrust Issues and Policies

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