Pricing to preclude sabotage in regulated industries

Authors

Arup Bose, Indian Statistical Institute, Kolkata
Debashis Pal, University of Cincinnati
David E.M. Sappington, University of Florida

Article Type

Research Article

Publication Title

International Journal of Industrial Organization

Abstract

We characterize the optimal access price and retail price for a vertically-integrated incumbent supplier (V) that faces limited competition from a new entrant in the retail sector. The optimal prices provide V with a relatively high wholesale profit margin and a relatively low retail profit margin. Consequently, V has no incentive to raise the costs of its retail rival.

First Page

162

Last Page

184

DOI

10.1016/j.ijindorg.2017.01.004

Publication Date

3-1-2017

Recommended Citation

Bose, Arup; Pal, Debashis; and Sappington, David E.M., "Pricing to preclude sabotage in regulated industries" (2017). Journal Articles. 2666.
https://digitalcommons.isical.ac.in/journal-articles/2666