Price vs. quantity competition in a vertically related market

Maria Alipranti*, Chrysovalantou Milliou, Emmanuel Petrakis

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

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.

Original languageEnglish
Pages (from-to)122-126
Number of pages5
JournalEconomics Letters
Volume124
Issue number1
Early online date9 May 2014
DOIs
Publication statusPublished - 1 Jul 2014

Keywords

  • Bertrand
  • Cournot
  • Two-part tariffs
  • Vertical relations

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