price discrimination in broadway theater a common thread in the theory literature on price discrimination has been the ambiguous welfare effects for consumers and the rise in profit for firms relative to uniform pricing in this study i resolve the ambiguity for consumers and quantify the benefit for a firm i describe a model of price discrimination that includes both second degree and third degree price discrimination using data from a broadway play i estimate the structural model and conduct various experiments to investigate the implications of alternative pricing policies the observed price discrimination may improve the firm s profit by approximately 5 relative to uniform pricing while the difference for aggregate consumer welfare is negligible also i show that the gain from changing prices in the face of fluctuating demand is small under the observed price discrimination

edgeworth price cycles cost based pricing and sticky pricing in retail gasoline markets abstract this paper examines dynamic pricing behavior in canadian retail gasoline markets i find three distinct pricing patterns cost based pricing sticky pricing and sharp asymmetric retail price cycles that resemble the edgeworth cycles of maskin and tirole 1988 i use a markov switching regression to estimate the prevalence of the regimes and the structural characteristics of the cycles themselves i find cycles are more prevalent when there are more small firms and are accelerated and amplified with very many small firms in markets with few small firms sticky pricing dominates the findings are consistent with the theory of edgeworth cycles

intertemporal pricing and price discrimination a semiparametric hedonic analysis of the personal computer market we apply a smooth coefficient semiparametric model to a unique high frequency data set to examine the intertemporal pricing of personal computers furthermore we test whether firms charge differential component prices for their top performance personal computers and whether premium firms charge both a premium for all their computers and a premium for their top performance ones we find nonlinear effects in the pricing of personal computer components we also find that firms in general do not charge differential prices for the components of their top performance computers in addition high quality firms charge higher premia only for their most advanced products copyright 2006 john wiley sons ltd

price discrimination copyright law and technological innovation evidence from the introduction of dvds u s copyright law effectively prevents direct price discrimination for copyright holders that sell to different markets in response these firms can engage in indirect price discrimination i derive theoretical predictions about the use of indirect price discrimination and i analyze how optimal pricing strategies differ for different products using data on vhs and dvd movie distribution i find that firms pricing choices are consistent with the predictions of theory and that firms use of indirect price discrimination benefits consumers but harms ancillary retailers finally i examine what optimal pricing strategies might look like in a legal environment that permits direct price discrimination

market structure and the pricing of electricity and natural gas us electricity and natural gas markets have traditionally been serviced by one of two market structures in some markets electricity and natural gas are sold by a regulated dual product monopolist while in other markets electricity and natural gas are sold by separate regulated single product monopolies i analyze whether electricity and natural gas prices depend on the market structure and compare these results to the predictions of a number of theories the results are most consistent with the political economy theories suggesting that regulators respond to interest group activity

why do manufacturers issue coupons an empirical analysis of breakfast cereals we explore the relationship between shelf prices and manufacturers coupons for 25 readyto eat breakfast cereals we find that shelf prices are lower during periods when coupons are available this result is inconsistent with static monopoly price discrimination under a broad range of assumptions we present evidence that is inconsistent with both dynamic theories of price discrimination and explanations of couponing based on the vertical relationship between manufacturers and retailers we find support for models of price discrimination in oligopoly settings as well as suggestions that firmwide incentives may induce managers to use coupons and price cuts simultaneously finally lagged coupons have a positive effect on current sales suggesting that coupons are used to induce repurchase

retail redlining are gasoline prices higher in poor and minority neighborhoods anyone who has ever struggled with poverty knows how extremely expensive it is to be poor go shopping one day in harlem for anything and compare harlem prices and quality with those downtown james baldwin nobody knows my name 1961 it s not that these businesses are saying you black people you get out of my establishment they are saying come on in but we re going to rip you off allison bethel florida assistant attorney general in u s news and world report 2000 i introduction the economics literature on discrimination in consumer markets is dominated by studies of differences in negotiated prices in two markets housing e g myers 2004 ondrich ross and yinger 2003 yinger 1986 1995 and automobiles e g ayres and siegelman 1995 goldberg 1996 a few additional studies examine price differentials in smaller markets in which prices are also negotiated such as trading cards list 2004 car repairs gneezy and list 2004 and fish graddy 1995 less evidence is available from the numerous consumer markets in which prices are publicly posted and fixed in this situation individually targeted racial price discrimination is unlikely because as siegelman 1998 points out it would require the flagrant and illegal display of different prices for whites and minorities however firms may still adopt practices that increase the probability that minorities or other targeted groups will pay higher prices we use data on gasoline prices and station characteristics from three metropolitan areas to test for one such practice commonly referred to as retail redlining following d rozario and williams 2005 we define retail redlining as a practice among retailers that results in lower quality goods and services and or higher prices in areas with large minority or poor populations claims of retail redlining arise regularly in both academic sources and the popular press often involving catch phrases such as the poor pay more the high price of poverty or the poorer you are the more things cost brown 2009 downing 2007 sturdivant 1969 accusations of retail redlining also arise in courtrooms and politics gm walmart burger king domino s pizza and kb toys have been sued for discriminatory practices in minority neighborhoods fuller 1998 jelisavcic 1996 kaplan 2000 smith 1996 in 1992 the mayor of los angeles touted the need for more equal access to supermarkets following the los angeles riots and in 2009 illinois senator roland burris introduced a request to the annual federal appropriations bill for a campaign to fight retail redlining on chicago s south side burris 2009 shaffer 2002 the bulk of the empirical evidence on retail redlining comes from the large grocery gap literature which explores variations across neighborhoods in the accessibility quality and price of food sold at grocery stores much of this evidence suggests that grocery prices are higher in inner city neighborhoods and that this is largely explained by the lack of large chain stores in these areas chung and myers 1999 hall 1983 kaufman et al 1997 shaffer 2002 by contrast hayes 2000 using a large nationally representative sample of price data from the sampling frame used to construct the consumer price index finds that prices are lower in poor neighborhoods but that the discount is not constant across races poor whites and hispanics receive discounts but poor blacks pay similar prices as affluent whites turning to the market for prepared food graddy 1997 finds that fast food meal prices increase by about 5 for a 50 point increase in the percent black in a zip code while food which makes up a large portion of consumer budgets is an important candidate for the study of inter neighborhood price variations accusations of retail redlining extend beyond this single market we provide evidence from a hitherto unexamined market retail gasoline

price discrimination and retail configuration the hypothesis that price discrimination based on willingness to pay for quality can occur in multifirm markets is confirmed using microdata on gasoline retailing a test that discriminates between price structures associated with discrimination and with cost driven competitive differentials is developed and implemented with controls for variation in outlet and market characteristics a second test based on profitability variation rejects a competitive peak load pricing explanation for the observed price dispersion the data suggest that price discrimination at the retail level adds at least 9 a gallon to the average price of full service gasoline

an analysis of dynamic price discrimination in airlines prices for the same flight change substantially depending on the time of purchase this article uses a unique data set with round the clock posted fares to document significant within day price variation labeling time variation as discriminatory is difficult because the cost of an unsold airline seat changes with inventory days before departure and aggregate demand expectations after controlling for these factors and aggregating hourly fares to have a framework with two consumer types we are able to identify a component that is largely consistent with dynamic price discrimination we find higher prices during office hours when business travelers are likely to buy and lower prices in the evening when leisure travelers are more likely to purchase as the proportion of business travelers increases closer to departure both price dispersion and price discrimination become larger we provide an alternative explanation for the observed within day price differentials which is related to edgeworth price cycles

the measurement of retail output and the retail revolution the computerization of retailing has made price dispersion a norm in the united states so that any given list price or transactions price is an increasingly imperfect measure of a product s resource cost as a consequence measuring the real output of retailers has become increasingly difficult food retailing is used as a case study to examine data problems in retail productivity measurement crude direct measures of grocery store output suggest that the cpi for food at home may have been overstated by 1 4 percentage points annually from 1978 to 1996 this abstract was borrowed from another version of this item

empirical studies of gasoline retailing a guide to the literature abstract this paper surveys the empirical literature on gasoline retailing which has been growing rapidly over the last three decades possibly in response to antitrust and regulatory concerns and increased availability of pricing data studies of both pricing and non price decision variables are considered in general it is found that crude oil prices are the primary driver of national price movements over time however market structure has been identified as playing a role in price dynamics equilibrium selection and price differentials across markets and stations the economic literature emphasizes the importance of heterogeneity across stations and coordination problems faced by retailers several directions for future work are suggested including the development of theory and demand estimation using high frequency station level data

consumer search and dynamic price dispersion an application to gasoline markets this article studies the role of imperfect information in explaining price dispersion we use a new panel data set on the u s retail gasoline industry and propose a new test of temporal price dispersion to establish the importance of consumer search we show that price rankings vary significantly over time however they are more stable among stations at the same street intersection weestablishtheequilibriumrelationshipsbetweenpricedispersionandkeyvariables from consumer search models price dispersion increases with the number of firms in the market decreases with the production cost and increases with search costs

price dispersion over the business cycle evidence from the airline industry this study provides empirical evidence documenting how price dispersion moves with the business cycle in the airline industry performing a fixed effects panel analysis on seventeen years of data covering two business cycles we find that price dispersion is highly pro cyclical this effect is especially pronounced for legacy carriers relative to low cost carriers we show that our empirical result is consistent with firms implementing second degree price discrimination tactics

price discrimination in free entry markets using a spatial model of monopolistic competition we investigate price discrimination in free entry zero profit markets we show that when brands are heterogeneous competition does not prevent discrimination the power to earn economic profits is not necessary for a firm to maintain discriminatory prices our model treats formally the fact that consumers difer not only in the utility they derive from a good but also in how strongly they prefer one brand over all others in markets where firms are very competitive sorting consumers on the strength on brand preference produces larger price differentials between groups than sorting on the basis of consumers reservation prices for the good when firms sort customers on the basis of strength of brand preference however we find that the output and welfare effects are generally less favorable than when sorting is more closely related to consumers reservation prices

separating between unobserved consumer types evidence from airlines we propose an alternative approach to identify unobserved consumer types and assess whether firms price discriminate unlike other screening schemes that rely on quantity discounts or product differentiation in our finite mixture structure individuals have unit demands and the product is homogeneous we implement the model using an original u s airlines data set the results support the existence of two demand types the high type business traveler is less price sensitive has a higher valuation and pays a higher price than the low type tourist the proportion of high types also increases as the departure date nears jel c23 l93 r41

using yield management to shift demand when the peak time is unknown traditional peak load and stochastic peak load models assume firms have prior information about when peak demand occurs however price dispersion such as is typically used by firms practicing yield management can achieve some of the same efficient demand shifting even when the peak time is unknown equilibrium price dispersion arises because of stochastic demand and price rigidities but a previously unexplored benefit of price dispersion is its ability to reduce equilibrium capacity costs through demand shifting the model also suggests how yield management now more commonly called revenue management might actually benefit business travellers contrary to the popular prejudice

vertical relationships and competition in retail gasoline markets empirical evidence from contract changes in southern california comment this study examines how much if any of the differences in retail gasoline prices between markets is attributable to differences in the composition of vertical contract types at gasoline stations in each market the purchase of the independent retail gasoline chain thrifty by arco provides a unique opportunity to examine the effects of changes in different vertical contract types on local retail prices this event caused sharp changes in the market share of i fully vertically integrated stations and ii independent stations differentially affecting local markets in the los angeles and san diego metropolitan areas using unique and detailed station level data this study examines how these sharp changes affected local retail prices the detailed data and the research design based on the thrifty station conversions allow for credible estimation of the effects of the market share of independent retailers and vertically integrated retailers on local market prices controlling for any omitted factors at the station level and the city level over time results for the los angeles and san diego metropolitan areas indicate that a decrease in the market share of independent stations has a significant positive impact on local retail price however a change in the market share of refiner owned and operated branded stations does not have a significant impact on local market price these results have important implications as policy makers consider the regulation of vertical contracts as a means to increase competition in gasoline markets the research design and detailed data also allow for inference on the underlying nature of retail gasoline competition

retail gasoline price dynamics and local market power using monthly data from the 48 contiguous states except nevada for the 1988 2002 period it is shown that retail gasoline prices respond faster to wholesale price increases than to equivalent wholesale price decreases moreover markets with high average retail wholesale margins experience a slower adjustment and a more asymmetric response since gasoline is the only variable input average margins in a state likely reflect the degree of retail market power this suggests that sticky prices and response asymmetries in the gasoline market are at least partially a consequence of retail market power

selling costs and switching costs explaining retail gasoline margins recent theoretical work has shown that price discrimination can take place in imperfectly competitive as well as monopoly markets the persistence of higher retail margins on unleaded than on leaded gasoline during the 1980s suggests that discrimination may occur even in very competitive markets this article studies a number of cost based explanations for such gasoline pricing as well as the possibility of price discrimination the analysis indicates that gas stations discriminate against groups of customers who are less likely to switch to another station the conclusions highlight the influence of shopping or search costs on pricing decisions even in markets thought to be quite competitive

number of sellers average prices and price dispersion abstract a variety of models provide differing predictions regarding the effect of an increase in the number of competitors in a market seller density on prices and price dispersion we review different approaches to generating equilibrium price dispersion and then empirically estimate the relationship between seller density average product price and price dispersion in the retail gasoline industry using four unique gasoline price data sets controlling for station level characteristics we find that an increase in station density consistently decreases both price levels and price dispersion across four geographical areas

dynamic pricing in retail gasoline markets supergame models of tacit collusion show that supportable price cost margins increase with expected future collusive profits ceteris paribus as a result collusive margins will be larger when demand is expected to increase or marginal costs are expected to decline using panel data on sales volume and gasoline prices in 43 cities over 72 months we find behavior consistent with tacit collusion in retail gasoline markets controlling for current demand and cost current margins increase with expected next month demand and decrease with expected next month cost the results are not consistent with intertemporal l inkages due to inventory behavior or customer loyalty

market integration in us gasoline markets this paper analyses the degree of market integration in the retail gasoline markets in the united states after it was completely deregulated in 1981 the monthly average prices of unleaded regular gasoline excluding taxes from january 1983 to december of 1998 for five us petroleum administration defense districts were considered in the analysis there is evidence of a high degree of market integration in the gasoline markets as evidenced by the engel and granger and johansen cointegration tests but perfect market integration is rejected in all but a few cases

the simple economics of extortion evidence from trucking in aceh this paper tests whether the behavior of corrupt officials is consistent with standard industrial organization theory we designed a study in which surveyors accompanied indonesian truck drivers on 304 trips during which they observed over 6 000 illegal payments to police soldiers and weigh station attendants using plausibly exogenous changes in the number of checkpoints we show that market structure affects the level of illegal payments we further show that corrupt officials use complex pricing schemes including third degree price discrimination and a menu of two part tariffs our findings illustrate the importance of considering the market structure for bribes when designing anticorruption policy

a theory of quality related differences in retail margins why there is a premium on premium gasoline this paper develops a theory of vertical and horizontal product differentiation to explain observed price cost margin differentials for goods that differ in quality the difference in price cost margins between the high and low quality goods is shown to depend positively on consumers average valuation for incremental increases in quality and positively on the distance to each competitor s closest rival these predictions are largely supported using an extensive station level data set of premium and regular unleaded gasoline prices from the los angeles basin area from 1992 1995

quality differences third degree price discrimination and welfare we propose a model with two markets to analyze the welfare implications of price discrimination with quality differences in each market a local firm that operates in that market only competes against a global firm that operates in both markets local firms produce higher quality goods than the global firm if the quality levels of the local firms products are the same price discrimination is never welfare decreasing if they differ discrimination is welfare increasing if quantity increases because of a positive allocation effect of price discrimination there are parameter values such that welfare increases while total output decreases with price discrimination jel d43 d60

the spanish retail petroleum market new patterns of competition since the liberalization of the industry in this paper we study the recent development of the spanish automotive fuels market in the context of a long process of liberalization and competition our aims are twofold first to overview the market s current patterns of competition while taking into account the political structural and strategic aspects that have marked the industry s recent evolution second to study in depth one competitive strategy that nowadays significantly influences competition and final prices the vertical relationships between operators and service stations our analysis draws attention to several indicators that may demonstrate the success of the opening and liberalization process increased levels of competition have stimulated the sector s growth development and modernization and given national firms an excellent platform for competing with newcomers furthermore studying the vertical agreements has produced interesting results we have found that relative price differences among brands increase in line with perceived quality differences and that the vertical separation of refineries and retailers eases price competition in the final market the empirical evidence was backed up with a database of 4164 spanish service stations

a textbook example of international price discrimination we show that books for general audiences are similarly priced internationally but textbooks are substantially more expensive in the united states we argue that cost factors cannot explain this phenomenon and discuss several demand side explanations

taxes cost and demand shifters as determinants in the regional gasoline price formation process evidence from spain abstract this paper examines the pass through of regional tax changes and spot price variations to regional gasoline prices in spain it also analyzes the impact of all major cost and demand shifters that contribute to regional gasoline price formation to address these research issues a reduced form price equation using monthly time series cross sectional tscs data from january 2004 through december 2008 is estimated strong and consistent evidence of full shifting of regional tax changes to regional gasoline prices is found gasoline spot price changes are more than proportionally passed through to retail prices in addition the empirical evidence shows on the one hand that regional gasoline price differences before taxes continue to be quite narrow and on the other hand that there is still a margin for larger gasoline price differences among regions this suggest that traditional practices from the monopoly era i e relatively uniform regional gasoline prices persist after the market has been liberalized which may have been facilitated by the strong and uniform presence of the major spanish based refining companies in the retail sector over the whole country

price discrimination in political advertising evidence from the 2012 presidential election in 2010 the us supreme court loosened contribution limits to political action committees pacs sparking fears that big donors could exert outsize influence on elections by funding pac advertising however pacs are potentially handicapped when buying advertising time data from 2012 reveal that pacs pay 32 above regulated campaign rates i estimate a model of demand for advertising by pacs exploiting the misalignment of state and media market borders to address price endogeneity i find that prices reflect willingness to pay for viewer demographics rather than media bias the estimates further suggest that network owned stations discriminate more successfully than do local affiliates

parallel imports challenges from unauthorized distribution channels we examine the problem of parallel imports unauthorized flows of products across countries which compete with authorized distribution channels the traditional economics model of a discriminating monopolist that has different prices for the same good in different markets requires the markets to be separated in some way usually geographically the profits from price discrimination can be threatened by parallel imports that allow consumers in the high priced region some access to the low priced marketplace however as this article shows there is a very real possibility that parallel imports may actually increase profits the basic intuition is that parallel importation becomes another channel for the authentic goods and creates a new product version that allows the manufacturer to price discriminate we propose a two country three stage model to quantitatively study the effects and strategies in the third stage and in the higher priced country where parallel imports have entered we characterize the resulting market segmentation one segment of consumers stays with the authorized version as they place more value on the warranty and services that come with the authorized version another segment switches to parallel imports because a lower price is offered due to lack of country specific features or warranties parallel imports also generate a third and new segment that would not have bought this product before unlike counterfeits that are fabricated by imitators all parallel imports are genuine and sourced from the manufacturer in the lower priced country through authorized dealers therefore the manufacturer s global sales quantity should increase but profit may rise or fall depending on the relative sizes and profitability of the segments a profit maximizing parallel importer should set price and quantity in the second stage after observing the manufacturer s prices in both countries there will be a threshold of across country price gap above which parallel imports would occur in the first stage the manufacturer can anticipate the possible occurrence of a parallel import its price and quantity and its effect on authorized sales in each country to make a coordinated pricing decision to maximize the global supply chain profit under some circumstances the manufacturer should allow parallel imports and under others should prevent them through a stackelberg game we solve for the optimal pricing strategy in each scenario we then find in one extension that when the number of parallel importers increases the optimal authorized price gap should narrow but the prices and quantities of parallel imports may rise or fall in another extension we nd that when the manufacturer has other means such as monitoring dealers differentiating designs and unbundling warranties to contain parallel imports the authorized price gap can widen as a function of the effectiveness of nonpricing controls in summary parallel imports may help the manufacturer to extend the global reach of its product and even boost its global profit if the manufacturer offers a discount version through its authorized dealers it is running a high risk of confusing customers and tarnishing brand images parallel imports may cause similar concerns for the manufacturer but unauthorized dealers are perceived as further removed from the manufacturer therefore there is less risk of confusing consumers when parallel imports are channeled through unauthorized dealers furthermore they are more nimble in diverting the product whenever their transshipment and marketing costs are small enough not to offset the authorized price gap and the valuation discount this may explain why some manufacturers fiercely fight parallel imports while others knowingly use this alternative channel

price discrimination in oligopoly evidence from regional newspapers recent theoretical work has shown that the incentive to target rival firms customers with low prices can increase price discrimination and that the strength of the incentive depends on a firm s market position using data on swedish newspaper subscriptions we find strong support for these predictions newspapers with a local competitor sell a larger part of their circulation at a discount than monopoly newspapers moreover in competitive markets the use of discounts is inversely related to the newspaper s market share we find no evidence that price discrimination based on observable and exogenous characteristics is influenced by the market structure

product variety and demand uncertainty why markups vary with quality we demonstrate that demand uncertainty can explain equilibrium product variety in the presence of sunk costs product variety is an efficient response to uncertainty because it reduces the expected costs associated with excess capacity we find that within the firm s product line the highest quality product has the highest profit margin but the lowest percentage margin while the lowest quality product has the highest percentage margin but the lowest absolute margin both of these relationships are consistent with evidence available from marketing studies what determines the breadth of a firm s product line we show that when production costs must be sunk in anticipation of demand demand uncertainty can lead to an increase in product variety by limiting their inventory of high quality goods and selling low quality goods once their high quality goods have stocked out firms reduce the costs associated with demand uncertainty the model helps explain the extent of product differentiation and suggests a rationale for many common retailing practices such as the use of private labels and full product line forcing by manufacturers the model also yields the testable empirical prediction that higher quality products earn higher absolute margins and lower percentage margins while differences in preferences provide a convincing explanation in many cases for product variety in retail stores we argue that another

economic and environmental impacts of the kyoto protocol in 2003 the kyoto protocol which imposes legally binding greenhouse gas emission constraints on industrialized countries is likely to enter into force the protocol has been celebrated as a milestone in climate protection but standard economic theory casts doubt that it will go beyond symbolic policy in this paper we show that the final concretion of the kyoto protocol is consistent with the theoretical prediction kyoto more or less boils down to business as usual without significant compliance costs to ratifying parties jel classification d58 q43 q58 consequences economiques et environnementales du protocole de kyoto en 2003 le protocole de kyoto qui impose aux pays industrialises l obligation de reduire leurs emissions de gaz a effet de serre entrera probablement en vigueur si le protocole a ete accueilli comme un grand pas en avant dans le combat pour proteger l environnement la theorie economique jette un regard sceptique sur la portee reelle d un tel accord et le considere comme un geste symbolique dans ce memoire on montre que la concretisation finale de l accord de kyoto s arrime aux predictions theoriques kyoto n est rien de plus que business as usual et n impliquera pas de couts significatifs pour les parties qui ont signe le protocole

price dispersion in the grocery market this paper provides an exploratory study of price dispersion in the grocery market and checks for the consistency of the evidence on this price dispersion with the existing theories of price dispersion due to costly consumer search competition and consumer heterogeneity in the context of the grocery market three dimensions of price dispersion are studied price dispersion for a certain brand across stores price dispersion within a category in a store across brands and price dispersion over time for a certain brand the results show that the standardized price dispersion is positively correlated with consumer search costs competition and consumer heterogeneity

china s emissions embodied in exports how regional and trade heterogeneity matter abstract trade facilitates the shifts of emissions from one place to another although studies have shown that regionally disaggregated model and model that distinguishes processing exports at national level are necessary to estimate the embodied emissions in china s exports no study evaluates this issue by simultaneously taking both regional and trade heterogeneity into account to fill this gap we re estimate the co2 emissions embodied in china s exports at both regional and industrial level by using the newly developed inter regional input output iriop model that distinguishes processing trade from other trade at regional level results show that comparing to the iriop model the traditional multi regional input output mrio model has overestimated the environmental loss from exports by 14 25 in 2002 and 7 20 in 2012 for different regions the largest bias is found in regions and industries with the highest processing export shares therefore the iriop model gives more accurate accounting on the regional environmental loss due to national exports and thus is important for establishing effective emission mitigation policies

package size and price discrimination in the paper towel market abstract estimates from a structural model of consumer behavior and firm conduct are used to decompose the extent to which quantity discounts for paper towels are consistent with second degree price discrimination as opposed to cost differences across sizes counterfactual exercises assuming that firms offer only one package size or charge uniform prices across sizes indicate that competition in the multi roll package size segment results in increased consumer surplus and lower prices for all consumers

price discrimination in grocery trade evidence from italy this paper investigates the determinants of price dispersion between staple and non staple goods in grocery retailing as the result of pricing decisions by multiproduct firms theoretical predictions about the nature of supermarkets pricing behaviour are compared and tested empirically using disaggregated data from the italian grocery trade over the period 1990 1992 the empirical results provide evidence for the existence in all types of retail organization of the form of price discrimination suggested by bliss particularly for specialist shops the results are consistent with discrimination due to the exploitation of consumers switching costs

third degree price discrimination in a short stay accommodation industry this article analyses the pricing in the short stay accommodation industry in tasmania it utilizes a novel 2008 survey of tasmanian short stay accommodation firms in which business managers were asked about their perception of the elasticity of their firm s demand in each of the market segments that their firm supplied this direct observation of elasticity allows us to demonstrate that firms price across market segments act in a manner consistent with the lerner index and the theory of third degree price discrimination further we show in line with expectations based on the literature that increased quality of the accommodation lowers the elasticity of demand while the elasticity of demand is higher in winter surprisingly internet sales channels do not exhibit a different elasticity of demand to other sales channels

price discrimination with differentiated products definition and identification i introduction price discrimination is said to exist when the same product is sold to different consumers at different prices most economists also agree that price discrimination is at work when similar but not identical products are sold at prices that do not reflect differences in costs economics textbooks are rife with examples such as student or senior citizen discounts hardcover and paperback versions of books dinner versus lunch prices at restaurants airfares with various restrictions and price spreads of retail gasoline products on the other hand some economists have criticized the identification of such apparent price anomalies as price discrimination for example lott and roberts 1991 argue that there are usually cost based explanations for these phenomena and propose such explanations for the cases of airfare gasoline and restaurant prices nevertheless the authors do not challenge the conventional wisdom that price differences that cannot be explained by cost differences are discriminatory in recent years a number of papers have set out to empirically assess instances of alleged price discrimination the literature goes to great lengths to control for potential sources of cost variation among different products and thus to the extent that it is successful is not subject to the lott roberts critique almost all studies conclude that price discrimination is practiced in the particular market they analyze a skeptic of course could always argue that some sources of cost variation have not been accounted for and thus dismiss the results as erroneous despite the mild controversy over the methodology and its effectiveness the basic premise seems universally accepted the existence of price variation that cannot be explained by cost differences constitutes price discrimination this is not however a formal definition in fact there is no single widely accepted definition of price discrimination when products are not homogeneous some authors define price discrimination to exist when price cost margins absolute differences between differentiated products are unequal whereas others prefer to compare price cost markups percentage differences few authors have discussed the relative merits of one measure over the other 1 the relationship between the two has never been spelled out and the choice among them remains arbitrary in this article i aim to shed some light on this issue and provide some guidelines to empirical researchers interested in price discrimination i start by providing an overview of the current state of the literature in section ii i introduce the two competing definitions of price discrimination and briefly discuss the justification that has been provided for each i then review the empirical literature that uses one or the other definition as the basis of testing for price discrimination i present the basic methodology and discuss the definitional choices made by researchers investigating different market environments the picture that emerges from this overview is murky and provides little guidance to the empirical practitioner the absence of controversy on the choice of definition might simply reflect the fact that the two commonly used definitions are equivalent in section iii i show that this is not the case specifically it is possible for one definition to indicate the presence of price discrimination and for the other one to reject it it is also possible for the two measures to take opposite signs that is one product may have a higher markup and a lower margin than the other i also show that in general the margin criterion is more likely to indicate the presence of price discrimination i conclude that the choice of definition has important implications and should be given careful consideration the challenge is to come up with a consistent way of thinking about price discrimination that can easily be applied in a variety of settings

empirical analysis of metering price discrimination evidence from concession sales at movie theaters prices for goods such as blades for razors ink for printers and concessions at movies are often set well above cost theory has shown that this could yield a profitable price discrimination strategy often termed metering the idea is that a customer s intensity of demand for aftermarket goods e g the concessions provides a meter of how much the customer is willing to pay for the primary good e g admission if this correlation in tastes for the two goods is positive a high price on the aftermarket good allows firms to extract a greater total price admissions plus concessions from higher type customers this paper develops a simple aggregate model of discrete continuous demand to motivate how this correlation can be tested using simple regression techniques and readily available firm data model simulations illustrate that the regressions can be used to predict whether aftermarket prices should be above below or equal to their marginal cost we then apply the approach to box office and concession data from a chain of spanish theaters and find that high priced concessions do extract more surplus from customers with a greater willingness to pay for the admission ticket

equilibrium price dispersion under demand uncertainty the roles of costly capacity and market structure when capacity is costly and prices are set in advance firms facing uncertain demand will sell output at multiple prices and limit the quantity available at each price i show that the optimal price strategy of a monopolist and the unique pure strategy nash equilibria of oligopolists both exhibit intrafirm price dispersion moreover as the market becomes more competitive prices become more dispersed a pattern documented in the airline industry while generating similar predictions the model differs from the revenue management literature because it disregards market segmentation and fare restrictions that screen customers

market power and second degree price discrimination in retail gasoline markets abstract empirical evidence of quality based second degree price discrimination is scarce the co existence of regular grade 10 ethanol blended gasoline e10 and regular grade non blended gasoline e0 in a major metropolitan city allows for second degree price discrimination to be examined while eliminating the issue of endogenous product differentiation because the two blends of gasoline are near perfect substitutes using a unique data set including daily price information for 402 retailers that sell only e0 gasoline only ethanol blended e10 gasoline or both blends simultaneously i find evidence that retailers use second degree price discrimination to segment the population between perceived lower and higher quality gasoline despite the fact that both blends can safely be used in nearly all vehicles additionally i uncover two elasticities of demand for gasoline and discuss the welfare effects of price changes and market segmentation

the effects of third degree price discrimination in oligopoly retail firms and restaurants commonly offer senior citizen discounts i suspect this practice is not motivated by altruism rather the behavior can be better explained as profit maximizing price discrimination these firms are setting a low price in a market which probably has high elasticity of demand but why should the demand of senior citizens be more elastic than average one possibility is that elderly people have below average income and they would not eat out if restaurant prices were high perhaps a more plausible explanation is that retired people simply have more time on their hands to spend commuting across town to take advantage of discounts the purpose of these discounts may then be to lure senior citizens away from other restaurants rather than to get them out of the house the analysis of third degree price discrimination has a long history a c pigou 1920 joan robinson 1933 and two articles on the subject have recently appeared in this review richard schmalensee 1981 hal varian 1985 the industry structure in these analyses is monopoly but an explicit model of some form of competition is obviously needed to study discriminatory discounts meant to attract customers from rival firms and even discounts meant to get people out of the house may have an oligopoly analysis which is qualitatively different from their monopoly anlysis in this paper i present a simple duopoly model of a differentiated products industry i show that a firm s price elasticity of demand in a market can be expressed as the sum of two parts the industry demand elasticity and the cross price elasticity the first measures the tendency of consumers in a market to stay home when the price goes up the second the tendency to switch suppliers in the monopoly case in which the crossprice elasticity is zero and the collusive case in which the cross price elasticity is irrelevant discrimination between markets is due to differences in industry demand elasticity in the noncooperative oligopoly case equilibrium price differentials can be accounted for both by differences in cross price elasticity as well as differences in industry demand elasticity total industry output when the firms can discriminate between two markets is compared to what it would be if discrimination were impossible which regime has larger output depends on the sum of the adjustedconcavity condition and the elasticity ratio condition the first predominates when the rival products are poor substitutes and the firms have approximate monopoly power while the second predominates at the other extreme where the products are close substitutes and the firms have almost no market power the adjusted concavity condition compares the relative curvature of demands in the two markets and was originally discovered by robinson 1933 in her analysis of monopoly price discrimination the elasticity ratio condition compares the relative difference in industry demand elasticity between the two markets with the relative difference in cross price elasticity according to the elasticity ratio condition a discriminatory discount due to high industry elasticity of demand would be more likely to increase total output than one due to high cross price elasticity the effect of discrimination on profit is also discussed the distinction made here department of economics university of wisconsin madison madison wi 53706 this paper is a revision of part of my doctoral dissertation i am grateful to steve matthews ken judd and john panzar for guidance in this research i also thank seminar participants at wisconsin the justice department and the 1986 econometric society meetings in new orleans and the discussant martin perry the excellent comments of the referees improved the exposition of the paper

regional finance and competition policy the canary islands petrol market market competition levels affect all agents of an economy businesses consumers and the state traditional analysis has evaluated the state s effects on the other agents but no analysis has been conducted regarding the inverse relationship thus the aim of this study is to estimate the tributary income losses that low levels of competition in the retail petrol market could cause in it using the data from canary islands autonomous community first we will use parker and roller s methodology 1997 to measure the level of competition and confirm a deficiency then using estimated rates we will determine the differences that would appear in tributary income if the market were to behave as a cournot s model our results show that the lack of competition causes a substantial loss of tributary income for this region somewhere between 5and 10 of the real income from the tax on unleaded petrol for the year 2004

an econometric model of location and pricing in the gasoline market abstract the authors propose an econometric model of both the geographic locations of gasoline retailers in singapore and price competition among retailers conditional on their geographic locations although market demand for gasoline is not observed the authors are able to infer the effects of such demand from stations locations and pricing decisions using available data on local market level demographics using the proposed location model which is based on the assumption of social welfare maximization by a policy planner the authors find that local potential gasoline demand depends positively on the local demographic characteristics of the neighborhood using the proposed pricing model which is based on the assumption of bertrand competition between retail chains the authors find that retail margins for gasoline are approximately 21 the authors also find that consumers are willing to travel up to a mile for a savings of 03 per liter using the estimates of the proposed econometric model the a

edgeworth price cycles evidence from the toronto retail gasoline market i exploit a new station level twelve hourly price dataset to examine the strong retail price cycles in the toronto gasoline market the cycles appear similar to theoretical edgeworth cycles strongly asymmetric tall rapid and highly synchronous across stations i test a series of predictions made by the theory about how firm behaviors would differentially evolve over the path of a cycle the evidence is consistent with the existence of edgeworth cycles and inconsistent with competing hypotheses while the cycles are an interesting phenomenon for study in their own right the evidence has important policy and welfare implications

quality based price discrimination and tax incidence the market for gasoline and diesel cars in europe the existing tax policies toward gasoline and diesel cars in european countries provide a unique opportunity to analyze quality based price discrimination and the implied tax incidence in my econometric framework consumers choose the type of engine based on their annual mileage prices are set by the manufacturers the relative pricing of gasoline and diesel cars appears to be consistent with monopolistic price discrimination effectively segmenting low mileage from high mileage consumers on average about 75 to 90 of the price differentials between gasoline and diesel cars can be explained by markup differences i draw implications for the effectiveness and the revenue effects of tax policy

do gasoline prices respond asymmetrically to crude oil price changes the authors test and confirm that retail gasoline prices respond more quickly to increases than to decreases in crude oil prices among the possible sources of this asymmetry are production inventory adjustment lags and market power of some sellers by analyzing price transmission at different points in the distribution chain the authors attempt to shed light on these theories spot prices for generic gasoline show asymmetry in responding to crude oil price changes which may reflect inventory adjustment effects asymmetry also appears in the response of retail prices to wholesale price changes possibly indicating short run market power among retailers