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Bonn Econ Discussion Papers, Bonn Graduate School of Economics (BGSE), Universität Bonn >
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http://hdl.handle.net/10419/22977
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| Title: | | Can price discrimination lead to product differentiation? A vertical differentiation model  |
| Authors: | | Herweg, Fabian |
| Issue Date: | | 2007 |
| Series/Report no.: | | Bonn econ discussion papers 2007,2 |
| Abstract: | | In this paper, I compare two-part tariff competition to linear pricing in a vertically differentiated duopoly. Consumers have identical tastes for quality but differ in their preferences for quantity. The main finding is that quality differentiation occurs in equilibrium if and only if two-part tariffs are permitted. Furthermore, two-part tariff competition encourages entry, which in turn increases welfare. Nevertheless, two-part tariff competition decreases consumers? surplus compared to linear pricing. |
| Subjects: | | Duopoly Two-part tariff Vertical differentiation |
| JEL: | | L13 L11 D43 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Bonn Econ Discussion Papers, Bonn Graduate School of Economics (BGSE), Universität Bonn
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