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

Dinda, Soumyananda; Mukherjee, Arijit

Authors

Soumyananda Dinda



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.

Journal Article Type Article
Publication Date 2014-02
Journal Journal of Public Economic Theory
Print ISSN 1097-3923
Publisher Wiley
Peer Reviewed Peer Reviewed
Volume 16
Issue 1
Pages 157-163
APA6 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. doi:10.1111/jpet.12044
DOI https://doi.org/10.1111/jpet.12044
Publisher URL https://onlinelibrary.wiley.com/doi/abs/10.1111/jpet.12044
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