Price discrimination and economics journals

An analysis of pricing by economics journal publishers shows that most publishers initially charge libraries and individual subscribers the same price. Over time, however, almost all eventually engage in price discrimination. The few publishers that never price-discriminate seem to be purchasing an explicit non-profit-maximizing pricing strategy. Once discrimination occurs, library prices rise faster than individual subscriber prices. These results are consistent with theoretical predictions.     

Price discrimination and efficient matching

This paper considers the problem of a monopoly matchmaker that uses a schedule of entrance fees to sort different types of agents on the two sides of a matching market into exclusive meeting places, where agents randomly form pairwise matches. We make the standard assumption that the match value function exhibits complementarities, so that matching types at equal percentiles maximizes total match value and is efficient. We provide necessary conditions and sufficient conditions for the revenue-maximizing sorting to be efficient. These conditions require the match value function, modified to incorporate the incentive cost of eliciting private type information, to exhibit complementarities in types.JEL Clalssification Numbers C7, D4We thank Jonathan Levin, Tracy Lewis, and the seminar audience at University of California at Los Angeles, University of British Columbia, Duke University, and 2003 Econometric Society North American Summer Meeting for comments and suggestions. We are also grateful for helpful suggestions from the referees and the Editor     

价格歧视及其应用研究

文章通过对价格歧视定义以及价格歧视种类的分析,并运用套利理论验证价格歧视,研究总结了经济中应用较为普遍的价格歧视形式,讨论了价格歧视在多级折扣票价和选择资费中的具体应用。     

Price discrimination via information provision

We study price discrimination where different prices are offered as a bundle with different levels of information about a product. The seller’s price discrimination induces high valuation buyers to purchase a good without information and low valuation buyers to purchase with information. Our analysis highlights several interesting results about price discrimination: (i) the seller’s choice of information provision is the combination of full information and no information, (ii) products can be cheaper without information provision than with information provision, (iii) as a result of price discrimination, prices can be more dispersed as buyers’ valuations become largely similar, and (iv) the high valuation buyers purchase a damaged good and may earn negative surplus. Furthermore, we investigate under which circumstances price discrimination is more profitable than uniform pricing. We show that a decline in transportation costs which facilitate price discrimination can be welfare reducing.     

Price discrimination of digital content

This paper considers the simplest DRM, which permits either free or no copying, with incomplete information about the type of consumer. We first obtain results concerning separability of consumers in a general situation, and show that there is a critical type of consumer. A higher utility type selects a menu of free copying whereas a lower one chooses not to copy. In a two-type model we indicate that optimal pricing for a producer is different from that under two-part tariffs. This price strategy brings about greater profits and social welfare if, and only if, self-production is more efficient than that of a producer.     

Price discrimination with a resource constraint

Introducing an aggregate resource constraint into Mussa and Rosen's [Mussa, M., Rosen, S., 1978. Monopoly and product quality. Journal of Economic Theory 18 (2), 301–317] model of monopoly price discrimination induces an upwards distortion in product quality for high valuation consumers because the standard downward distortions in product quality for other consumers relax the resource constraint.     

Price discrimination: A classroom experiment

In this article, the authors describe a classroom experiment aimed at familiarizing students with different types of price discrimination (first-, second-, and third-degree price discrimination). During the experiment, the students were asked to decide what tariffs to set as monopolists for each of the price discrimination scenarios under consideration. The objective was to allow the students to work empirically, through trial and error, selecting tariffs for each type of discrimination that would maximize a monopolistic entrepreneur's profits. The purpose of the exercise also was to enable the students to differentiate each type of price discrimination and to set tariffs in each case, as well to help them understand the repercussions in terms of welfare for each type of price discrimination.     

Price discrimination and price dispersion in a duopoly

This paper analyses the problem of price discrimination in a market where consumers have heterogeneous preferences both over a horizontal parameter (brand) and a vertical one (quality). Discriminatory contracts are characterized for different market structures. It is shown that price dispersion, i.e. the observed range of prices for each class of customers, increases almost everywhere as competition is introduced in the market.     

Price discrimination using linear and nonlinear pricing simultaneously

Price discrimination practiced by using linear and nonlinear pricing simultaneously raises the average price for heterogenous consumers paying linear price but lowers for homogeneous group who pay nonlinear price. Discrimination lowers consumer surplus for both groups but increases total surplus.     

Price and quality competition

This study considers an oligopoly model with simultaneous price and quality choice. Ex-ante homogeneous sellers compete by offering products at one of two quality levels. The consumers have heterogeneous tastes for quality: for some consumers it is efficient to buy a high quality product, while for others it is efficient to buy a low quality product. In the symmetric equilibrium firms use mixed strategies that randomize both price and quality, and obtain strictly positive profits. This framework highlights trade-offs which determine the impact of consumer protection policy in the form of quality standards.     

Price discrimination in Cournot–Nash oligopoly

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.     

Price cap regulation and water quality

Journal of Regulatory Economics - A number of studies suggest that price cap regulation may reduce the quality of the regulated good. This paper analyzes the impact on drinking water quality of a...     

Intellectual property rights and quality improvement

This paper explores why theories about the effects of intellectual property rights (IPR) protection on foreign direct investment (FDI) and innovation have reached mixed conclusions. In our model, Northern firms innovate to improve the quality of existing products and may later shift production to the South through FDI. Southern firms may then imitate the products of multinationals. We find that imitation can increase FDI and innovation for quality improvements, whereas the opposite occurs when innovators develop new varieties. Hence, stronger IPR protection, by reducing imitation, may shift innovation away from improvements in existing products toward development of new products.     

Relaxing competition through quality differentiation and price discrimination

In this paper, I compare two-part tariff competition to linear pricing in a vertically differentiated duopoly. Consumers have identical tastes for quality but differ in their preferences for quantity. The main finding is that quality differentiation occurs in equilibrium if and only if two-part tariffs are feasible. Furthermore, two-part tariff competition encourages entry, which in turn increases welfare. Nevertheless, two-part tariff competition decreases consumer surplus compared to linear pricing.     

Price competition, quality and income disparities

A market is considered, the demand side of which consists of a large number of consumers with identical tastes but different income levels, and the supply side, of two firms selling at no cost products which are relatively close substitutes for each other. Consumers are assumed to make indivisible and mutually exclusive purchases. A full characterization of the demand structure and the non cooperative market solution is given, and the dependence of the latter on income distribution and quality parameters is analyzed.     

Third-degree price discrimination,quality choice,and welfare

Employing an endogenous quality choice model, we reconsider the effect on welfare of monopolistic third-degree price discrimination. We prove that price discrimination always enhances welfare, mainly because the quality improvement owing to price discrimination increases consumer surplus. Moreover, we show that third-degree price discrimination benefits all parties, including consumers in the higher priced market if the preference differences between markets are sufficiently large.     

Price competition and quality differentiation with multiproduct firms

This paper examines a two-stage competition where firms simultaneously choose the number of products and qualities in the first stage, and then compete in prices. It is shown that a monopolist must sell a single product. In addition, in any equilibrium of multiproduct duopoly, there are segmented patterns of quality differentiation. Entangled configurations never emerge because each firm has an incentive to reduce the number of products facing direct competition with its rival. This result contrasts sharply with the equilibrium of non-segmented quality differentiation when firms compete in quantities. Furthermore, we find that the high-quality firm never offers more products than the low-quality firm, and quality differentiation between firms is greater than that within a firm.     

Price, unit value, and quality demanded

Given the paucity of quality price data, it is common to rely on “unit value” (average expenditure per unit) as a proxy for price, but this is an imperfect proxy if households respond to price increases by substituting to lower quality goods. This paper draws on survey data that contain both unit value and price to estimate the severity of quality substitution in Indonesia, finding that it is prevalent. The paper next calculates price elasticities that correct for quality substitution, evaluating and ultimately rejecting a commonly used method for calculating price elasticities using only unit value data. Finally, it demonstrates that quality substitution can result in biased price elasticities even when price is perfectly observed.