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- Publisher
- de Gruyter
- Copyright
- © 2022 Walter de Gruyter GmbH, Berlin/Boston
- ISSN
- 1935-1704
- eISSN
- 1935-1704
- DOI
- 10.1515/bejte-2021-0069
- Publisher site
- See Article on Publisher Site
Abstract
AbstractWe study social efficiency of entry in the presence of downstream cost asymmetry and upstream price discrimination. We show that entry is excessive when the entrants are highly inefficient, and it is insufficient when either the entrants are efficient or their inefficiency is low. The results are in sharp contrast to the existing literature considering upstream uniform pricing (Cao, H., and L. F. S. Wang. 2020. “Social Efficiency of Entry in a Vertically Related Industry Revisited.” Economics Letters 129. Art. no. 109200), as discriminatory pricing alters the relative strengths of the business-stealing, business-creation and production-(in)efficiency effects.
Journal
The B.E. Journal of Theoretical Economics – de Gruyter
Published: Jan 1, 2023
Keywords: excessive entry; insufficient entry; vertical market; price discrimination; L13; L40