Article
Strategic Effects of Three-Part Tariffs under Oligopoly
International Economic Review
(2013)
Abstract
The distinct element of a three-part tariff, compared with linear pricing or a two-part tariff, is its quantity target within which the marginal price is zero. This quantity target instrument enriches the firm's strategy set in dictating the competition to a specific level, even in the absence of usual price discrimination motive. With general differentiated linear demand system, the competitive effect of a three-part tariff in contrast to linear pricing depends on the degree of substitutability between products: competition is intensified when two products are more differentiated, yet softened when two products are more substitutable.
Keywords
- Three-Part Tariffs,
- Strategic Effects,
- Product Differentiation,
- Oligopoly,
- Antitrust
Disciplines
Publication Date
August, 2013
Citation Information
Yong Chao. "Strategic Effects of Three-Part Tariffs under Oligopoly." International Economic Review 54(3): 977-1015.