Price Caps as Welfare-Enhancing Coopetition
Bibliographic Data
| ID | 10173050 |
|---|---|
| Authors | Patrick Rey (0000-0002-4141-2728, Toulouse School of Economics), Jean Tirole (Toulouse School of Economics) |
| Year | 2018 |
| Volume | 127 |
| Issue | 6 |
| Pages | 3018-3069 |
| Publication date | 2018-12-12 |
| Peer Reviewed | Yes |
| Open Access | No |
| Type | ARTICLE |
| Venue | Journal of Political Economy (JOURNAL) |
| Journal identifiers | ISSN: 0022-3808 • E-ISSN: 1537-534X |
| Publisher | University of Chicago Press (PUBLISHER • US) |
| DOI | 10.1086/702014 |
| OpenAlex | W2610233368 |
| Language | EN |
| Citations received | 2 |
| References cited | 33 |
The paper analyzes the impact of price caps agreed upon by industry participants. Price caps, like mergers, allow firms to solve Cournot's multiple marginalization problem; but unlike mergers, they do not stifle price competition in case of substitutes or facilitate foreclosure in case of complements. The paper first demonstrates this for non-repeated interaction and general demand and cost functions. It then shows that allowing price caps has no impact on investment and entry in case of substitutes. Under more restrictive assumptions, the paper finally generalizes the insights to repeated price interaction, analyzing coordinated effects when goods are not necessarily substitutes
Bertrand competition · Competition (biology · Complementary good · Coopetition · Cournot competition · Economics · Incentive · Industrial organization · Investment (military · Market economy · Microeconomics · Oligopoly · Welfare · Business Strategy and Innovation · Consumer Market Behavior and Pricing · Merger and Competition Analysis
| Unique citing works | 2 |
|---|---|
| Citations per year | 1 |
| Citation span | 2024 - 2024 (1) |
| Citation velocity | recent |
| Highly cited | No |
| Citation types | Neutral: 2 |