Working paper

Price Caps as Welfare-Enhancing Coopetition

Patrick Rey, and Jean Tirole

Abstract

The paper makes two related contributions. First, and in contrast with the rich body of literature on collusion with (mainly perfect) substitutes, it derives general results on the sustainability of tacit coordination for a class of nested demand functions that allows for the full range between perfect substitutes and perfect complements. Second, it studies the desirability of joint marketing alliances, an alternative to mergers. It shows that a combination of two informationfree regulatory requirements, mandated unbundling by the joint marketing entity and unfettered independent marketing by the firms, makes joint-marketing alliances always socially desirable, whether tacit coordination is feasible or not.

Keywords

tacit collusion; cooperation; substitutes and complements; essentiality; joint marketing agreements; patent pools; independent licensing; unbundling; co-opetition;

JEL codes

  • D43: Oligopoly and Other Forms of Market Imperfection
  • L24: Contracting Out • Joint Ventures • Technology Licensing
  • L41: Monopolization • Horizontal Anticompetitive Practices
  • O34: Intellectual Property and Intellectual Capital

Replaced by

Patrick Rey, and Jean Tirole, Price Caps as Welfare-Enhancing Coopetition, Journal of Political Economy, vol. 127, n. 6, December 2019, pp. 3018–3069.

Reference

Patrick Rey, and Jean Tirole, Price Caps as Welfare-Enhancing Coopetition, TSE Working Paper, n. 13-439, October 23, 2013, revised January 2018.

See also

Published in

TSE Working Paper, n. 13-439, October 23, 2013, revised January 2018