Salant, Stephen Walter
Spending and pricing to deter arbitrage / Stephen W. Salant
Bibliografía
This article presents examples of arbitrage deterrence from the pharmaceutical, chemical and auto industries. Based on these cases, it develops two models where a monopolist prices and spends to deter arbitrage. The models differ in whether the lower price is set by the firm or negotiated with a representative of consumers. In both models, imports into the high-price market are completely deterred, but the two markets are nonetheless linked by the threat of arbitrage. If this linkage is ignored and the absence of arbitrage is misattributed to exogenous factors, econometric estimates of firm bargaining power will be biased upwards.
ARBITRAJE INDUSTRIAL
INDUSTRIA FARMACEUTICA
INDUSTRIA QUIMICA
INDUSTRIA AUTOMOVILISTICA
MONOPOLIOS
The Economic Journal 0013-0133 [papel] v. 134, n. 662, August 2024, p. 2638-2654.
Spending and pricing to deter arbitrage / Stephen W. Salant
Bibliografía
This article presents examples of arbitrage deterrence from the pharmaceutical, chemical and auto industries. Based on these cases, it develops two models where a monopolist prices and spends to deter arbitrage. The models differ in whether the lower price is set by the firm or negotiated with a representative of consumers. In both models, imports into the high-price market are completely deterred, but the two markets are nonetheless linked by the threat of arbitrage. If this linkage is ignored and the absence of arbitrage is misattributed to exogenous factors, econometric estimates of firm bargaining power will be biased upwards.
ARBITRAJE INDUSTRIAL
INDUSTRIA FARMACEUTICA
INDUSTRIA QUIMICA
INDUSTRIA AUTOMOVILISTICA
MONOPOLIOS
The Economic Journal 0013-0133 [papel] v. 134, n. 662, August 2024, p. 2638-2654.