The Competitive E ects of Price-Floors
نویسنده
چکیده
We analyze the e ects of a legally-binding price oor using Hotelling's model of locational competition. A moderate priceoor destroys the maximal di erentiation equilibrium of d'Aspremont et. al., by allowing rms to compete more aggressively for market share. Minimum di erentiation results, with lower equilibrium prices. A low price oor results in mulitiple equilibria both minimum and maximum di erentiation are possible. JEL Categories: L13, L15, L42.
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