Résumé
Cross-subsidization arises naturally when firms with different comparative ad- vantages compete for consumers with diverse shopping patterns. Firms then face a form of co-opetition, being substitutes for one-stop shoppers and complements for multi-stop shoppers. Competition for one-stop shoppers then drives total prices down to cost, but firms subsidize weak products with the profit made on strong products. While firms and consumers would benefit from cooperation limiting cross- subsidization (e.g., through price caps), banning below-cost pricing instead increases firms’ profits at the expense of one-stop shoppers; this calls for a cautious use of below-cost pricing regulations in competitive markets.
Mots-clés
cross-subsidization; shopping patterns; multiproduct competition; co-opetition;
Codes JEL
- L11: Production, Pricing, and Market Structure • Size Distribution of Firms
- L41: Monopolization • Horizontal Anticompetitive Practices
Remplace
Zhijun Chen et Patrick Rey, « Competitive Cross-Subsidization », TSE Working Paper, n° 13-450, 14 décembre 2013, révision novembre 2018.
Référence
Zhijun Chen et Patrick Rey, « Competitive Cross-Subsidization », The RAND Journal of Economics, vol. 50, n° 3, 2019, p. 645–665.
Voir aussi
Publié dans
The RAND Journal of Economics, vol. 50, n° 3, 2019, p. 645–665