Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/170685
Authors: 
Caprice, Stéphane
Shekhar, Shiva
Year of Publication: 
2017
Series/Report no.: 
DICE Discussion Paper 271
Abstract: 
Large retailers, competing with smaller stores that carry a narrower range, can exercise market power by pricing below cost some of their products. Below-cost pricing arises as an exploitative device rather than a predatory device (e.g., Chen and Rey, 2012). Unlike standard textbook models, we show that positive consumer value is not required in these frameworks. Large retailers can sell products offering consumers a negative value. We use our insight to revisit some classic issues in vertical relations.
Subjects: 
multiproduct retailers
loss-leading
negative consumer value
JEL: 
L13
L81
ISBN: 
978-3-86304-270-7
Document Type: 
Working Paper

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