In this article, Michael Salinger shows how a dominant firm that faces competition for part but not all of its market can maintain prices above competitive levels by offering cliff discounts with a threshold that allocates some market share to its competitors. To read more, click the link below.
Assessing umbrella pricing incentives
When collusive agreements involve a subset of firms in an industry, they may create the incentive and ability for firms that are not participants in the cartel...