A note on the adverse effect of competition on consumers: adverse effect of competition on consumers

Dinda, Soumyananda; Mukherjee, Arijit

Abstract

It is usually believed that higher competition, implying more active firms, benefits consumers. We show that this may not be the case in an industry with asymmetric cost firms. A rise in the number of more cost‐inefficient firms makes the consumers worse off in the presence of a welfare‐maximizing tax/subsidy policy. A rise in the number of more cost‐inefficient firms also reduces social welfare.

Citation

Dinda, S., & Mukherjee, A. (2014). A note on the adverse effect of competition on consumers: adverse effect of competition on consumers. Journal of Public Economic Theory, 16(1), 157-163. https://doi.org/10.1111/jpet.12044

• Journal Article Type: Article
• Acceptance Date: Oct 5, 2011
• Online Publication Date: Jun 25, 2013
• Publication Date: 2014-02
• Deposit Date: Dec 10, 2018
• Journal: Journal of Public Economic Theory
• Print ISSN: 1097-3923
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• Volume: 16
• Issue: 1
• Pages: 157-163
• DOI: https://doi.org/10.1111/jpet.12044
• Public URL: https://nottingham-repository.worktribe.com/output/1394465
• Publisher URL: https://onlinelibrary.wiley.com/doi/abs/10.1111/jpet.12044