"Ineffective" competition : a puzzle?

Andrey V. Ivanov; Florian Mueller

Conventionally, we think of an increase in competition as weakly decreasing prices, increasing the number of consumers served, thus increasing consumer surplus, decreasing firms profits, etc. Here, we demonstrate that, under some tame circumstances, an increase in competition may lead to a price increase in a horizontally differentiated market. We show this relationship for the petrol market in German cities.

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Year of publication:	2006 ; This Version: V 3.5.1, May 26, 2006
Authors:	Ivanov, Andrey V. ; Müller, Florian
Publisher:	Mannheim [u.a.] : Sonderforschungsbereich/Transregio 15
Subject:	Vickrey auction; Multi-unit auction; ex-post equilibrium; reserve price; uniqueness \| Multi-unit auction \| ex-post equilibrium \| reserve price \| uniqueness \| Auktionstheorie \| Auction theory