Negative consumer value and loss leading

Résumé

Large retailers competing with smaller stores that carry a narrower range can exercise market power by pricing below cost for some of their products. Below-cost pricing arises as an exploitative device rather than a predatory device (e.g., Chen and Rey, 2012). Unlike standard textbook models, we show that positive consumer value is not required in these frameworks. Large retailers can sell products offering consumers a negative value. We use this insight to revisit some classic issues in vertical relations.

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Remplacé par

Stéphane Caprice et Shiva Shekhar, « Negative market value and loss leading », Economics Bulletin, vol. 39, n° 1, janvier 2019, p. 94–103.

Référence

Stéphane Caprice et Shiva Shekhar, « Negative consumer value and loss leading », TSE Working Paper, n° 17-835, août 2017.