Référence

Patrick Rey et Zhijun Chen, « Loss Leading as an Exploitative Practice », American Economic Review, vol. 102, n° 7, 2012, p. 3462–3482.

Résumé

We show that large retailers, competing with smaller stores that carry a narrower range, can exercise market power by pricing below cost some of the products also offered by the smaller rivals, in order to discriminate multi-stop shoppers from onestop shoppers. Loss leading thus appears as an exploitative device rather than as an exclusionary instrument, although it hurts the smaller rivals as well; banning below-cost pricing increases consumer surplus, rivals’ profits, and social welfare. Our insights extend to industries where established firms compete with entrants offering fewer products. They also apply to complementary products such as platforms and applications.

Mots-clés

loss leading; exploitative practice; retail power;

Codes JEL

  • L11: Production, Pricing, and Market Structure • Size Distribution of Firms
  • L41: Monopolization • Horizontal Anticompetitive Practices

Partenaire de recherche

Orange

Remplace

Patrick Rey et Zhijun Chen, « Loss Leading as an Exploitative Practice », IDEI Working Paper, n° 658, 23 novembre 2010, révision décembre 2011.