The cost effect in third-degree price discrimination

In the presence of a non-constant marginal cost and demand uncertainty, we show that an output increase is no longer a necessary condition for welfare to increase following the introduction of third-degree price discrimination. We thus highlight the existence of an effect that might offset the well known output and misallocation effects of price discrimination. We propose a specific example where this is indeed the case.     

Backward integration and collusion in a duopoly model with asymmetric costs

This paper formalizes the idea that input transactions might be used to implement side payments among colluding firms. A model is proposed to analyze the effect of backward integration on collusive outcomes in a downstream duopoly with asymmetric marginal costs. Vertical integration expands the set of collusive outcomes that are sustainable for a given realization of the discount factor. This is an additional effect of vertical integration that antitrust authorities should consider. Side payments implemented by input sales are more relevant the larger the difference in marginal costs, since they allow for the shifting of production towards the relatively more efficient firms, while maintaining firms’ incentives to collude. A price of the input above that posted by an alternative source or sales of the input below cost may be observed, depending on the realization of downstream firms’ costs.      

Consumer surplus bias and the welfare effects of price discrimination

Journal of Regulatory Economics - This paper examines the incentives for efficient pricing mechanism in markets with non-convexities. The wholesale electricity market is a prominent example....     

The Structure of Payments in Technology Transfer Contracts: Evidence from Spain

This paper studies the impact of contract duration in determining scheduled payments in international transfers of technology. Analyzing a sample of contracts written by Spanish firms in 1991, the main empirical finding is a positive relationship between contract duration and the probability of the parties including variable payments in the first period of the agreement. This result suggests that the parties choose the type of payments to be made, whether fixed or variable, so as to avoid early termination of the relationship, even in the absence of opportunistic behavior or risk aversion.     

Contractual implications of international trade in tacit knowledge

This article searches for evidence on the additional difficulty the parties have in contracting for the transfer of know-how relative to the transfer of patented technology. A sample of contracts for the acquisition of technology Spanish firms in 1991 is analysed to find a positive relationship between contract duration and the likelihood of transferring know-how in unaffiliated transfers. It is also found that technical assistance is bundled together with the transfer of know-how, suggesting that the parties try to mitigate opportunistic behaviour on the licensor's side.