Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/130409
Authors: 
Helfrich, Magdalena
Herweg, Fabian
Year of Publication: 
2016
Series/Report no.: 
CESifo Working Paper 5786
Abstract: 
We investigate the effect of a ban on third-degree price discrimination on the sustainability of collusion. We build a model with two firms that may be able to discriminate between two consumer groups. Two cases are analyzed: (i) Best-response symmetries so that profits in the static Nash equilibrium are higher if price discrimination is allowed. (ii) Best-response asymmetries so that profits in the static Nash equilibrium are lower if price discrimination is allowed. In both cases, firms’ discount factor has to be higher in order to sustain collusion in grim-trigger strategies under price discrimination than under uniform pricing.
Subjects: 
collusion
duopoly
grim-trigger strategies
third-degree price discrimination
JEL: 
D43
K21
L13
L41
Document Type: 
Working Paper

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