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Article
Market Regulation and Multimarket Rivalry
Rand Journal of Economics (1996)
  • Owen R Phillips, University of Wyoming
  • Charles F Mason
Abstract

Multimarket contact between duopolists in an X and a Y market is modelled with a trigger strategy. We show that mildly restrictive price-cap regulation in the X market decreases Y market quantities; but restrictive caps in the X market have a positive impact on Y market outputs. Behavior in laboratory markets confirms these propositions. Regulation that lowers X market prices by a small amount results in a statistically significant reduction in Y outputs. When the regulated X market price is reduced to the Cournot/Nash level, Y market outputs rise to a point statistically indistinguishable from the unregulated quantities.

Disciplines
Publication Date
Fall 1996
Publisher Statement
Original publication can be found at Rand Journal of Economics
Citation Information
Owen R Phillips and Charles F Mason. "Market Regulation and Multimarket Rivalry" Rand Journal of Economics Vol. 27 Iss. 3 (1996)
Available at: http://works.bepress.com/owen_phillips/9/