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Exclusionary Pricing and Rebates When Scale Matters
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1725-6704
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EUI ECO; 2007/30
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KARLINGER, Liliane, MOTTA, Massimo, Exclusionary Pricing and Rebates When Scale Matters, EUI ECO, 2007/30 - https://hdl.handle.net/1814/7255
Abstract
We consider an incumbent firm and a more effcient entrant, both
offering a network good to several asymmetric buyers. The incumbent
disposes of an installed base, while the entrant has a network of size zero
at the outset, and needs to attract a critical mass of buyers to operate.
We analyze different price schemes (uniform pricing, implicit price discrimination
- or rebates, explicit price discrimination) and show that the
schemes which - for given market structure - induce lower equilibrium
prices are also those under which the incumbent is more likely to exclude
the rival