The Experts below are selected from a list of 315 Experts worldwide ranked by ideXlab platform
Konstantinos Serfes - One of the best experts on this subject based on the ideXlab platform.
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Third-Degree Price Discrimination
Journal of Industrial Organization Education, 2011Co-Authors: Qihong Liu, Konstantinos SerfesAbstract:This lecture deals with third-degree Price Discrimination in both monopolistic and oligopolistic markets. The classical monopoly paradigm serves as a benchmark. Next, we move to an oligopoly setting, first with best-response symmetry, then with best-response asymmetry. We end with behavior-based Price Discrimination. This lecture targets advanced undergraduate and graduate students.
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Price Discrimination in Two-Sided Markets
SSRN Electronic Journal, 2010Co-Authors: Qihong Liu, Konstantinos SerfesAbstract:We examine the profitability and welfare implications of targeted Price Discrimination in two-sided markets. First, we show that equilibrium discriminatory Prices exhibit novel features relative to discriminatory Prices in one-sided models and uniform Prices in two-sided models. Second, we compare the profitability of perfect Price Discrimination, relative to uniform Prices in a two-sided market. The conventional wisdom from one-sided horizontally differentiated markets is that Price Discrimination hurts the firms and benefits consumers, prisoners' dilemma. We show that Price Discrimination, in a two-sided market, may actually soften the competition. Our results suggest that the conventional advice that Price Discrimination is good for competition based on one-sided markets may not carry over to two-sided markets.
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Price Discrimination in Two-Sided Markets
2007Co-Authors: Qihong Liu, Konstantinos SerfesAbstract:We examine the profitability and the welfare implications of Price Discrimination in two-sided markets. Platforms have information about the preferences of the agents that allows them to Price discriminate within each group. The conventional wisdom from one-sided horizontally differentiated markets is that Price Discrimination hurts the firms and benefits consumers, prisoners' dilemma. Moreover, it is well-known that the presence of indirect externalities in two-sided markets can intensify the competition. Despite all these, we show that the possibility of Price Discrimination, in a two-sided market, may actually soften the competition. Therefore, the implications of Price Discrimination from one-sided markets may not carry over to two-sided markets. This is the case regardless of whether Prices are public or private, although private Prices boost profits. Our analysis also sheds light on the welfare properties of Price Discrimination in intermediate goods markets, such as Business-to-Business (B2B) markets.
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Imperfect Price Discrimination, market structure, and efficiency
Canadian Journal of Economics, 2005Co-Authors: Konstantinos SerfesAbstract:We introduce a flexible third-degree Price Discrimination framework by modeling the information firms possess about consumers' locations (preferences) on the Salop circle as a partition. Higher information quality is translated into a partition refinement. In the limit, we obtain the perfect Price Discrimination paradigm. We show that the free-entry equilibrium number of firms exhibits a U-shape as a function of the quality of information. This implies that Price Discrimination generates the most efficient free-entry outcome.
Aviv Nevo - One of the best experts on this subject based on the ideXlab platform.
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Intertemporal Price Discrimination in Storable Goods Markets
American Economic Review, 2013Co-Authors: Igal Hendel, Aviv NevoAbstract:We study intertemporal Price Discrimination when consumers can store for future consumption needs. We offer a simple model of demand dynamics, which we estimate using market-level data. Optimal pricing involves temporary Price reductions that enable sellers to discriminate between Price sensitive consumers, who stockpile for future consumption, and less Price-sensitive consumers, who do not stockpile. We empirically quantify the impact of intertemporal Price Discrimination on profits and welfare. We find that sales (i ) capture 25–30 percent of the gap between non-discriminatory profits and (unattainable) third-degree Price Discrimination profits, (ii ) increase total welfare, and (iii) have a modest impact on consumer welfare. (JEL D11, D12, L11, L12, L81) Consumers are heterogeneous in many ways, including preferences, income, and transportation and storage costs. Faced with heterogeneous consumers, firms can benefit from Price Discrimination. When consumer types are unobservable, firms need to rely on screening mechanisms to separate them. Empirically, we know little about the potential benefits of Price Discrimination, or how well different screening mechanisms work. Furthermore, the impact of Price Discrimination on welfare, especially in an oligopoly setting, is ambiguous. In this paper, we empirically study the role of intertemporal Price Discrimination in storable goods markets. We estimate preferences and use the estimates to test whether Price Discrimination motives are driving sales. Finding that sales could be driven by Price Discrimination motives, we evaluate the effectiveness of sales as a Price Discrimination tool. We do so by comparing profits when there are sales to profits under third-degree Price Discrimination, where the seller can identify the different consumer types and prevent arbitrage. In order to compute optimal pricing and welfare under different counterfactual pricing regimes, we need to model how consumers respond to a temporary Price
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intertemporal Price Discrimination in storable goods markets
National Bureau of Economic Research, 2011Co-Authors: Igal Hendel, Aviv NevoAbstract:We study intertemporal Price Discrimination when consumers can store for future consumption needs. To make the problem tractable we offer a simple model of demand dynamics, which we estimate using market level data. Optimal pricing involves temporary Price reductions that enable sellers to discriminate between Price sensitive consumers, who anticipate future needs, and less Price-sensitive consumers. We empirically quantify the impact of intertemporal Price Discrimination on profits and welfare. We find that sales: (1) capture 25-30% of the profit gap between non-discriminatory and third degree Price Discrimination profits, and (2) increase total welfare.
Timothy Hazledine - One of the best experts on this subject based on the ideXlab platform.
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Price Discrimination in Cournot–Nash oligopoly
Economics Letters, 2006Co-Authors: Timothy HazledineAbstract:Abstract The standard Cournot–Nash oligopoly model is extended to encompass Price Discrimination, where firms charge more than one Price for the same product based on willingness to pay. In the linear, symmetric case, the average Price is not dependent on the extent of Price Discrimination.
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Price Discrimination in cournot nash oligopoly
Economics Letters, 2006Co-Authors: Timothy HazledineAbstract:Abstract The standard Cournot–Nash oligopoly model is extended to encompass Price Discrimination, where firms charge more than one Price for the same product based on willingness to pay. In the linear, symmetric case, the average Price is not dependent on the extent of Price Discrimination.
Igal Hendel - One of the best experts on this subject based on the ideXlab platform.
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Intertemporal Price Discrimination in Storable Goods Markets
American Economic Review, 2013Co-Authors: Igal Hendel, Aviv NevoAbstract:We study intertemporal Price Discrimination when consumers can store for future consumption needs. We offer a simple model of demand dynamics, which we estimate using market-level data. Optimal pricing involves temporary Price reductions that enable sellers to discriminate between Price sensitive consumers, who stockpile for future consumption, and less Price-sensitive consumers, who do not stockpile. We empirically quantify the impact of intertemporal Price Discrimination on profits and welfare. We find that sales (i ) capture 25–30 percent of the gap between non-discriminatory profits and (unattainable) third-degree Price Discrimination profits, (ii ) increase total welfare, and (iii) have a modest impact on consumer welfare. (JEL D11, D12, L11, L12, L81) Consumers are heterogeneous in many ways, including preferences, income, and transportation and storage costs. Faced with heterogeneous consumers, firms can benefit from Price Discrimination. When consumer types are unobservable, firms need to rely on screening mechanisms to separate them. Empirically, we know little about the potential benefits of Price Discrimination, or how well different screening mechanisms work. Furthermore, the impact of Price Discrimination on welfare, especially in an oligopoly setting, is ambiguous. In this paper, we empirically study the role of intertemporal Price Discrimination in storable goods markets. We estimate preferences and use the estimates to test whether Price Discrimination motives are driving sales. Finding that sales could be driven by Price Discrimination motives, we evaluate the effectiveness of sales as a Price Discrimination tool. We do so by comparing profits when there are sales to profits under third-degree Price Discrimination, where the seller can identify the different consumer types and prevent arbitrage. In order to compute optimal pricing and welfare under different counterfactual pricing regimes, we need to model how consumers respond to a temporary Price
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intertemporal Price Discrimination in storable goods markets
National Bureau of Economic Research, 2011Co-Authors: Igal Hendel, Aviv NevoAbstract:We study intertemporal Price Discrimination when consumers can store for future consumption needs. To make the problem tractable we offer a simple model of demand dynamics, which we estimate using market level data. Optimal pricing involves temporary Price reductions that enable sellers to discriminate between Price sensitive consumers, who anticipate future needs, and less Price-sensitive consumers. We empirically quantify the impact of intertemporal Price Discrimination on profits and welfare. We find that sales: (1) capture 25-30% of the profit gap between non-discriminatory and third degree Price Discrimination profits, and (2) increase total welfare.
Fabian Herweg - One of the best experts on this subject based on the ideXlab platform.
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Fighting Collusion by Permitting Price Discrimination
2016Co-Authors: Magdalena Helfrich, Fabian HerwegAbstract:We investigate the effect of a ban on third-degree Price Discrimination on the sustainability of collusion. We build a model with two firms that may be able to discriminate between two consumer groups. Two cases are analyzed: (i) Best-response symmetries so that profits in the static Nash equilibrium are higher if Price Discrimination is allowed. (ii) Best-response asymmetries so that profits in the static Nash equilibrium are lower if Price Discrimination is allowed. In both cases, firms’ discount factor has to be higher in order to sustain collusion in grim-trigger strategies under Price Discrimination than under uniform pricing.
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Fighting collusion by permitting Price Discrimination
Economics Letters, 2016Co-Authors: Magdalena Helfrich, Fabian HerwegAbstract:We investigate the effect of a ban on third-degree Price Discrimination on the sustainability of collusion. We build a model with two firms that may be able to discriminate between two consumer groups. Two cases are analyzed: (i) Best-response symmetries so that profits in the static Nash equilibrium are higher if Price Discrimination is allowed. (ii) Best-response asymmetries so that profits in the static Nash equilibrium are lower if Price Discrimination is allowed. In both Price Discrimination scenarios, firms’ discount factor has to be higher in order to sustain collusion in grim-trigger strategies than under uniform pricing.
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Price Discrimination in input markets downstream entry and efficiency
Munich Reprints in Economics, 2012Co-Authors: Fabian Herweg, Daniel MullerAbstract:The extant theory on Price Discrimination in input markets takes the structure of the downstream industry as exogenously given. This paper endogenizes the structure of the downstream industry and examines the effects of permitting third-degree Price Discrimination on market structure and welfare. We identify situations where permitting Price Discrimination leads to either higher or lower wholesale Prices for all downstream firms. These findings are driven by upstream profits being discontinuous due to costly entry. Moreover, permitting Price Discrimination fosters entry which often improves welfare. Nevertheless, entry can also reduce welfare because it may lead to a severe inefficiency in production.
