Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/102142
Authors: 
Choné, Philippe
Linnemer, Laurent
Year of Publication: 
2014
Series/Report no.: 
CESifo Working Paper 4874
Abstract: 
We adapt the exclusion model of Choné and Linnemer (2014) to reflect the notion that dominant firms are unavoidable trading partners. In particular, we introduce the share of the buyer's demand that can be addressed by the rival as a new dimension of uncertainty. Nonlinear price-quantity schedules allow the dominant firm to adjust the competitive pressure placed on the rival to the size of the contestable demand, and to distort the rival supply at both the extensive and intensive margins. When disposal costs are sufficiently large, this adjustment may yield highly nonlinear and locally decreasing schedules, such as retroactive rebates .
Subjects: 
inefficient exclusion
buyer opportunism
disposal costs
quantity rebates
incomplete information
JEL: 
L12
L42
D82
D86
Document Type: 
Working Paper

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