Economics, Econometrics and Finance
4 years ago

Firms Profit More by Raising Prices, Crushing Competition

1 view
'Be Nice, Unless it Pays to Fight': A New Theory of Price Determination with Implications for Competition Policy
Jan Boone

Paper Summary

A new theory of price determination suggests that when firms are similar, prices are higher. If a new firm enters the market or an existing one gets more efficient, prices go up. This theory also explains price leadership, joint dominance, and efficiency offense in industries.

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