Product variety and welfare under tough and soft pricing regimes

• 成果类型: Article
• 署名作者: Norman, G; Thisse, JF
• 署名单位: heSam Universite; Universite Pantheon-Sorbonne
• 刊物名称: ECONOMIC JOURNAL
• ISSN/ISSBN: 0013-0133
• DOI: 10.2307/2234932
• 发表日期: 1996
• 页码: 76-91
• 关键词: monopolistic competition; spatial competition; entry

摘要

We re-examine the economic justification for the regulation of firms' price policies. Existing analysis of the relative benefits of alternative pricing policies, by treating market structure as exogenous, loses an important trade-off Price deregulation leading to, for example, discriminatory pricing, on the one hand, enhances competition between incumbents but, on the other, acts as a strong deterrent against entry. We illustrate this trade-off by analysing the familiar address model of product differentiation and show that product variety is determined by the degree of spatial contestability of the market (the ability of entrants to make binding location commitments) and by whether firms are free to price discriminate.