Munich Personal RePEc Archive

Market Share Discounts and Investment Incentives

Sloev, Igor (2007): Market Share Discounts and Investment Incentives.

[img]
Preview
PDF
MPRA_paper_13990.pdf

Download (212kB) | Preview

Abstract

The paper investigates pro- and anticompetitive e¤ects of the use of market share discounts (MSD�s). While MSD�s can be used for exploiting a dominant position and may lead to a welfare reduction, MSD�s also can serve as an e¢ cient device for the creation of incentives. Particularly, if a �nal demand for an upstream manufacturer�s good depends on a promotional e¤ort of a retailer, the manufacturer can e¤ectively use MSD�s to induce an optimal level of the retailer�s e¤ort. Moreover, it is possible that MSD�s have a positive impact both on the consumers�surplus and the total industry pro�ts. Thus the use of MSD�s should not be treated as an anticompetitive practice a priori, but rather it has to be judged on a case-by-case basis.

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.