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Input Price Discrimination, Access Pricing, and Bypass

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  • Ngo Van Long
  • Antoine Soubeyran

Abstract

This paper explores several aspects of the vertical relationship between an upstream firm and a number of downstream firms that are Cournot rivals relying on the inputs provided by the upstream firm. We address the following questions: (i) if the upstream firm can charge different prices to different downstream firms, will it charge higher prices to more efficient firms? (ii) if the upstream firm can provide different levels of quality of access to several ex ante identical downstream firms, will it provide a uniform quality of access? The answer to (i) depends on whether downstream firms can self-supply. As for (ii), we show that equals may be treated unequally. Nous examinons le problème des relations verticales. Quand un fournisseur discrimine, est-ce qu'il impose aux firmes à coût marginal plus bas un prix de l'input plus haut que celui qu'il impose aux firmes à coût marginal plus haut? Nous montrons que cela dépend de la capacité des firmes aval à partiellement produire l'input. Nous fournissons aussi une formule de charge d'accès dans le cas où les firmes aval sont des compétiteurs à la Cournot non identiques. Finalement, nous développons un modèle de discrimination par la qualité d'un input, et nous montrons que la firme amont peut trouver profitable de traiter différemment des firmes identiques.

Suggested Citation

  • Ngo Van Long & Antoine Soubeyran, 1999. "Input Price Discrimination, Access Pricing, and Bypass," CIRANO Working Papers 99s-23, CIRANO.
    • Handle: RePEc:cir:cirwor:99s-23
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    File URL: https://cirano.qc.ca/files/publications/99s-23.pdf
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    References listed on IDEAS

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    1. Gérard Gaudet & Stephen W. Salant, 1991. "Uniqueness of Cournot Equilibrium: New Results From Old Methods," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 399-404.
    2. Katz, Michael L, 1987. "The Welfare Effects of Third-Degree Price Discrimination in," American Economic Review, American Economic Association, vol. 77(1), pages 154-167, March.
    3. Armstrong, Mark & Doyle, Chris & Vickers, John, 1996. "The Access Pricing Problem: A Synthesis," Journal of Industrial Economics, Wiley Blackwell, vol. 44(2), pages 131-150, June.
    4. Van Long, N. & Soubeyran, A., 1997. "Cost Manipulation in an Asymmetric Oligopoly: The Taxation Problem," ASSET - Instituto De Economia Publica 173, ASSET (Association of Southern European Economic Theorists).
    5. Long, Ngo Van & Soubeyran, Antoine, 2001. "Cost Manipulation Games in Oligopoly, with Costs of Manipulating," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(2), pages 505-533, May.
    6. DeGraba, Patrick, 1990. "Input Market Price Discrimination and the Choice of Technology," American Economic Review, American Economic Association, vol. 80(5), pages 1246-1253, December.
    7. John Vickers, 1995. "Competition and Regulation in Vertically Related Markets," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 62(1), pages 1-17.
    8. Van Long, N. & Soubeyran, A., 1997. "Cost Manipulation in Oligopoly: A Duality Approach," ASSET - Instituto De Economia Publica 174, ASSET (Association of Southern European Economic Theorists).
    9. Marcel Boyer, 1999. "Les Expos, l'OSM, les universités, les hôpitaux : Le coût d'un déficit de 400 000 emplois au Québec = Expos, Montreal Symphony Orchestra, Universities, Hospitals: The Cost of a 400,000-Job Shortfall i," CIRANO Papers 99c-01, CIRANO.
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    Cited by:

    1. Valletti, Tommaso M., 2003. "Input price discrimination with downstream Cournot competitors," International Journal of Industrial Organization, Elsevier, vol. 21(7), pages 969-988, September.
    2. Siegfried K. Berninghaus & Werner Güth & Claudia Keser, 1999. "Decentralized or Collective Bargaining in a Strategy Experiment," CIRANO Working Papers 99s-31, CIRANO.
    3. Ali Béjaoui & Paul Lanoie & François Raymond, 1999. "Qui veut réduire ses heures de travail? Le profil des travailleurs adhérant à un programme de partage de l'emploi," CIRANO Working Papers 99s-30, CIRANO.
    4. Michelle Lacombe & Paul Lanoie & Michel Patry & Michel Tremblay, 1999. "Why Firms Outsource Their Human Resources Activities: An Empirical Analysis," CIRANO Working Papers 99s-27, CIRANO.

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    More about this item

    Keywords

    Input price; discount; self-supply; Prix d'un input; remises; intégration;
    All these keywords.

    JEL classification:

    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts

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