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SUMMARY:COMPETITIVE CROSS-SUBSIDISATION - Patrick Rey\, Professor of Econo
 mics\, University Toulouse
DTSTART:20181114T130000Z
DTEND:20181114T143000Z
UID:TALK114814@talks.cam.ac.uk
CONTACT:Emily Brown
DESCRIPTION:Co authored with Zhijun Chen.\nCross-subsidisation arises natu
 rally when firms with different comparative advantages compete for consume
 rs with heterogeneous shopping patterns. Firms then face a form of co-opet
 ition\, as they offer substitutes for one-stop shoppers and complements fo
 r multi-stop shoppers. When intense competition for one-stop shoppers driv
 es total prices down to cost\, firms subsidise weak products with the prof
 it made on strong products. Firms have moreover incentives to seek compara
 tive advantages on different products. Finally\, banning below-cost pricin
 g increases firms' profits at the expense of one-stop shoppers\, which cal
 ls for a cautious use of below-cost pricing regulations in competitive mar
 kets.
LOCATION:KH107\, Cambridge Judge Business School
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