Interfirm bundled discounts as a collusive device

Hahn, Jong-Hee and Kim, Sang-Hyun (2016) Interfirm bundled discounts as a collusive device. Journal of Industrial Economics, 64 (2). 255–276. ISSN 0022-1821

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Abstract

This paper investigates whether and how firms competing in price with homogeneous goods (i.e., Bertrand competitors) can achieve supernormal profits using interfirm bundled discounts. By committing to offering price discounts conditional on the purchase of a specific brand of other differentiated good, the homogeneous good suppliers can separate consumers into distinct groups. Such brand-specific discounts help the firms relax competition and attain a collusive outcome. Consumers become worse o§ due to higher effective prices. Our result shows that in oligopolies it is feasible to leverage other's market power without excluding rivals.

Item Type: Article
Additional Information: "This is the peer reviewed version of the following article: Hahn, J.-H. and Kim, S.-H. (2016), Interfirm Bundled Discounts as a Collusive Device. The Journal of Industrial Economics, 64: 255–276. doi: 10.1111/joie.12097, which has been published in final form at http://dx.doi.org/10.1111/joie.12097. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving."
Faculty \ School: Faculty of Social Sciences > School of Economics
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Depositing User: Pure Connector
Date Deposited: 01 Apr 2016 10:10
Last Modified: 07 Nov 2020 00:46
URI: https://ueaeprints.uea.ac.uk/id/eprint/58030
DOI: 10.1111/joie.12097

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