Price vs. quantity competition in a vertically related market revisited
In a recent paper, Alipranti et al. (2014, Price vs. quantity competition in a vertically related market, Economics Letters, 124: 122-126) show that, in a vertically related market, Cournot competition yields higher social welfare than Bertrand competition if the upstream firm subsidises the downstr...
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| Format: | Article |
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Elsevier
2017
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| Online Access: | https://eprints.nottingham.ac.uk/40452/ |
| _version_ | 1848796060196012032 |
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| author | Basak, Debasmita Mukherjee, Arijit |
| author_facet | Basak, Debasmita Mukherjee, Arijit |
| author_sort | Basak, Debasmita |
| building | Nottingham Research Data Repository |
| collection | Online Access |
| description | In a recent paper, Alipranti et al. (2014, Price vs. quantity competition in a vertically related market, Economics Letters, 124: 122-126) show that, in a vertically related market, Cournot competition yields higher social welfare than Bertrand competition if the upstream firm subsidises the downstream firm’s production via negative wholesale input prices. However, the assumption of a negative input price is not economically viable as it encourages the downstream firms to buy an unbounded amount of inputs. We show that the welfare ranking is reversed once we introduce a non-negativity constraint on the input prices |
| first_indexed | 2025-11-14T19:41:58Z |
| format | Article |
| id | nottingham-40452 |
| institution | University of Nottingham Malaysia Campus |
| institution_category | Local University |
| last_indexed | 2025-11-14T19:41:58Z |
| publishDate | 2017 |
| publisher | Elsevier |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | nottingham-404522020-05-04T18:43:26Z https://eprints.nottingham.ac.uk/40452/ Price vs. quantity competition in a vertically related market revisited Basak, Debasmita Mukherjee, Arijit In a recent paper, Alipranti et al. (2014, Price vs. quantity competition in a vertically related market, Economics Letters, 124: 122-126) show that, in a vertically related market, Cournot competition yields higher social welfare than Bertrand competition if the upstream firm subsidises the downstream firm’s production via negative wholesale input prices. However, the assumption of a negative input price is not economically viable as it encourages the downstream firms to buy an unbounded amount of inputs. We show that the welfare ranking is reversed once we introduce a non-negativity constraint on the input prices Elsevier 2017-04-30 Article PeerReviewed Basak, Debasmita and Mukherjee, Arijit (2017) Price vs. quantity competition in a vertically related market revisited. Economics Letters, 153 . pp. 12-14. ISSN 0165-1765 Bargaining; Bertrand; Cournot; Two-part tariffs; Vertical pricing; Welfare http://www.sciencedirect.com/science/article/pii/S0165176517300320 doi:10.1016/j.econlet.2017.01.021 doi:10.1016/j.econlet.2017.01.021 |
| spellingShingle | Bargaining; Bertrand; Cournot; Two-part tariffs; Vertical pricing; Welfare Basak, Debasmita Mukherjee, Arijit Price vs. quantity competition in a vertically related market revisited |
| title | Price vs. quantity competition in a vertically related market revisited |
| title_full | Price vs. quantity competition in a vertically related market revisited |
| title_fullStr | Price vs. quantity competition in a vertically related market revisited |
| title_full_unstemmed | Price vs. quantity competition in a vertically related market revisited |
| title_short | Price vs. quantity competition in a vertically related market revisited |
| title_sort | price vs. quantity competition in a vertically related market revisited |
| topic | Bargaining; Bertrand; Cournot; Two-part tariffs; Vertical pricing; Welfare |
| url | https://eprints.nottingham.ac.uk/40452/ https://eprints.nottingham.ac.uk/40452/ https://eprints.nottingham.ac.uk/40452/ |