Price vs. quantity competition in a vertically related market

This paper demonstrates that the standard conclusions regarding the comparison of Cournot and Bertrand competition are reversed in a vertically related market with upstream monopoly and trading via two-part tariffs. In such a market, downstream Cournot competition yields higher output, lower wholesale prices, lower final prices, higher consumers’ surplus, and higher total welfare than Bertrand competition.

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Year of publication:	2014
Authors:	Alipranti, Maria ; Milliou, Chrysovalantou ; Petrakis, Emmanuel
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 124.2014, 1, p. 122-126
Publisher:	Elsevier
Subject:	Cournot \| Bertrand \| Vertical relations \| Two-part tariffs

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Type of publication:	Article
Classification:	D43 - Oligopoly and Other Forms of Market Imperfection ; L13 - Oligopoly and Other Imperfect Markets ; L14 - Transactional Relationships; Contracts and Reputation; Networks
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010784985