Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/87443
Authors: 
Funaki, Yukihiko
Houba, Harold
Motchenkova, Evgenia
Year of Publication: 
2012
Series/Report no.: 
Tinbergen Institute Discussion Paper 12-139/II
Abstract: 
We consider price-fee competition in bilateral oligopolies with perfectly-divisible goods, non-expandable infrastructures, concentrated agents on both sides, and constant marginal costs. We define and characterize stable market outcomes. Buyers exclusively trade with the supplier with whom they achieve maximal bilateral joint welfare. Prices equal marginal costs. Threats to switch suppliers set maximal fees. These also arise from a negotiation model that extends price competition. Competition in both prices and fees necessarily emerges. It improves welfare compared to price competition, but consumer surpluses do not increase. The minimal infrastructure achieving maximal aggregate welfare differs from the one that protects buyers most.
Subjects: 
Assignment Games
Infrastructure
Negotiations
Non-linear pricing
Market Power
Countervailing power
JEL: 
C78
L10
L14
D43
R10
Document Type: 
Working Paper

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