Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/145814
Authors: 
Schmutzler, Armin
Edlin, Aaron
Roux, Catherine
Thoeni, Christian
Year of Publication: 
2016
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2016: Demographischer Wandel - Session: Experimental IO E05-V1
Abstract: 
The paper provides an experimental analysis of above-cost predatory pricing in a multi-period interaction between a monopolistic incumbent and a potential entrant. It shows that, without policy interventions, the threat of post-entry price cuts discourages entry without forcing incumbents to abstain from monopoly pricing. A policy suggested by Edlin that curtails such price cuts encourages entry and reduces the prices set by monopolistic incumbents. An alternative policy suggested by Baumol that prohibits post-exit price increases does less to encourage entry, and it does not prevent high pre-entry prices. However, as expected, it keeps post-exit prices low.
JEL: 
L13
D43
C92
Document Type: 
Conference Paper

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