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| Author: | Phillips, O. Mason, C. |
| Title: | Market regulation and multimarket rivalry |
| Journal: | RAND Journal of Economics
1996 : AUTUMN, VOL. 27:3, p. 596-617 |
| Index terms: | ECONOMICS MARKETING REGULATIONS |
| Language: | eng |
| Abstract: | Multimarket contact between duopolists in an X and Y market is modelled with a trigger strategy. The authors show that mildly restrictive price-cap regulation in the X market decreases Y market quantities; but restrictive caps in the X market have a positive impact on Y market outputs. Behaviour in laboratory markets confirms these propositions. Regulation that lowers X market prices by a small amount results in a statistically significant reduction in Y outputs. When the regulated X market price is reduced to the Cournot/Nash level, Y market outputs rise to a point statistically indistinguishable from the unregulated quantities. |
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