The marginal price effects of antitrust rules against price discrimination

The two central pricing rules contained in most antitrust laws are prohibitions of below-cost pricing and prohibitions of discriminatory pricing. This article shows that the rule against discriminatory pricing may actually induce firms to charge exclusionary below-cost prices, even in the complete a...

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Bibliographic Details
Published inEconomics letters Vol. 117; no. 3; pp. 921 - 923
Main Author Zenger, Hans
Format Journal Article
LanguageEnglish
Published Elsevier B.V 01.12.2012
Subjects
Antitrust pricing rules
Cost function
Marginal utility
Non-linear pricing
Personalized pricing
Price discrimination
Pricing
Personalized pricing
Antitrust pricing rules
L1
K2
L4
Non-linear pricing
Price discrimination
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Summary:The two central pricing rules contained in most antitrust laws are prohibitions of below-cost pricing and prohibitions of discriminatory pricing. This article shows that the rule against discriminatory pricing may actually induce firms to charge exclusionary below-cost prices, even in the complete absence of any predatory intent on the part of firms. ► Antitrust laws often prohibit below-cost pricing and discriminatory pricing. ► The rule against price discrimination may actually induce firms to price below cost. ► The incentive arises absent any predatory intent on the part of firms.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0165-1765
1873-7374
DOI:10.1016/j.econlet.2012.07.017