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| Francisco Galera and Pedro Mendi |
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| ''Free entry and welfare with price discrimination'' |
| ( 2011, Vol. 31 No.4 ) |
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| We show that if firms in an industry engage in third-degree price discrimination, the number of firms in the free-entry equilibrium may be inefficiently low. This result is obtained even with set up costs and a price above marginal cost. We discuss the relevant implications that our result has for policy design. |
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| Keywords: Free entry, Social welfare, Third-degree price discrimination, Oligopoly, Business stealing. |
JEL: L1 - Market Structure, Firm Strategy, and Market Performance: General
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| Manuscript Received : Feb 17 2011 | | Manuscript Accepted : Dec 05 2011 |
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