We analyze the competitive effects of quantity discounts in an asymmetric duopoly. We find that for a sizeable set of parameter values, quantity discounts harm the smaller firm and reduce consumers' surplus. They can even decrease social welfare, i.e. the sum of producers' and consumers' surpluses. However, the circumstances in which quantity discounts may decrease social welfare are limited and difficult to identify in practice.
Calzolari G. , Denicolò V. (2011). On the anti-competitive effects of quantity discounts. INTERNATIONAL JOURNAL OF INDUSTRIAL ORGANIZATION, 29, 337-341 [10.1016/j.ijindorg.2010.12.003].
On the anti-competitive effects of quantity discounts
CALZOLARI, GIACOMO;DENICOLO', VINCENZO
2011
Abstract
We analyze the competitive effects of quantity discounts in an asymmetric duopoly. We find that for a sizeable set of parameter values, quantity discounts harm the smaller firm and reduce consumers' surplus. They can even decrease social welfare, i.e. the sum of producers' and consumers' surpluses. However, the circumstances in which quantity discounts may decrease social welfare are limited and difficult to identify in practice.File in questo prodotto:
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