Alipranti, Maria Milliou, Chrysovalantou Petrakis, Emmanuel
Year of Publication:
DICE Discussion Paper 146
This paper demonstrates that the standard conclusions regarding the comparison of Cournot and Bertrand competition are reversed in a vertically related market with upstream monopoly and trading via two-part tariffs. In such a market, downstream Cournot competition yields higher output, lower wholesale prices, lower final prices, higher consumers' surplus, and higher total welfare than Bertrand competition.