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Complementarities, Below-cost Pricing, and Welfare Losses

Vanessa von Schlippenbach

出版	SSRN, 2008
URL	http://books.google.com.hk/books?id=le7RzQEACAAJ&hl=&source=gbs_api

註釋

We analyze below-cost pricing in retail markets and examine its impact on social welfare as well as on suppliers' incentives to invest in quality. Considering negotiations about a linear wholesale price between the retailer and her suppliers, we find that below-cost pricing aggravates the double marginalization problem and causes welfare losses compared to a regime where below-cost pricing is banned. Furthermore, suppliers have stronger incentives to invest in high quality products if a ban of below-cost pricing is enforced.