We show that if firms in an industry engage in third-degree price discrimination, the number of firms in the free-entry equilibrium may be inefficiently low. This result is obtained even with set up costs and a price above marginal cost. We discuss the relevant implications that our result has...

It has been proved that in an homogeneous product industry, price over marginal costs, business stealing, set up costs and free entry imply excess entry from the welfare point of view. The proof assumes identical firms. We show by example that with non-identical firms, those conditions are...

In this paper, I propose a simple and useful technique to analyze and solve any Cournot model by means of a parallel competitive market. The reaction curves of firms in the Cournot model are interpreted as supply functions in the parallel market. The method is particularly well suited to...