pricing of goods and services are one of the fundamental instrument of competition and prerequisite for a competetive market is the right to determine prices freely by undertakimgs. competition law has declared discriminative pricing as an anticompetetive practices in many jurisdiction while analysis specially in the scope of intellectual property rights shows that many form of price discrimina...

Perfect competition or Bertrand competition cause price to equal marginal cost, so that excise tax incidence can be illustrated with the most basic supply-demand diagram. Some results are: • excise taxes are shared by suppliers and demanders according to their relative price elasticities • holding revenue fixed, it doesn’t matter (for supply price, demand price, and quantity traded) whether the...

This paper examines the competitiveness of winner-take-all price competition in homogeneous product oligopoly environments where underlying buyer demands and/or firms’ costs need not be continuous. Our analysis is motivated by the observation that a variety of economic settings have these features. For example, in 1996 an Ivy League university solicited bids from several vendors for its initiat...

This paper studies market competition when firms can influence consumers’ ability to compare market alternatives, through their choice of price “formats”. We introduce random graphs as a tool for modeling limited comparability of formats. Our main results concern the interaction between firms’ equilibrium price and format decisions and its implications for industry profits and consumer switchin...

Economic intuition suggests that increased competition generates lower prices. However, recent theoretical work shows that a monopolist may charge a lower price than a firm facing a competitor selling a differentiated product. The direction of the price change when competition is introduced is dependent upon the joint distribution of buyer values for the two products. We explore this relationsh...

We look at price formation in a retail setting, that is, companies set prices, and consumers either accept prices or go someplace else. In contrast to most other models in this context, we use a two-dimensional spatial structure for information transmission, that is, consumers can only learn from nearest neighbors. Many aspects of this can be understood in terms of generalized evolutionary dyna...

Frequency competition influences capacity allocation decisions in airline markets and has important implications to airline profitability and airport congestion. Market share of a competing airline is a function of its frequency share and the relationship between the two is pivotal for understanding the impacts of frequency competition on airline business. Based on the most commonly accepted fo...

Two sellers with ex-ante identical products, whose qualities can be either high or low, first choose a binary information structure, modeled as the probability that the signal reveals the state. After the buyer independently draws one private signal from each information structure, the sellers then each choose a price in the second stage. We identify two equilibria in information structures, a ...

Based on the wide application of relevant classical and modern economic thoughts, this paper analyzed the implications of price discovery and competition, compared the market auto adjustment mechanism and the government control of economy, explored market failure and price distortion, and drew the conclusion of the necessity of market mechanism design which is especially helpful for the reform ...