Price Discrimination and Efficient Distribution

This paper focuses on third‐degree price discrimination by an upstream firm with some degree of monopoly power. Downstream firms fall into two categories: efficient and inefficient, according to their relative costs of transforming a unit of the upstream good into a unit of final product. Under ordinary static conditions, price discrimination favors the inefficient firms, which have more elastic demands. We consider, however, the possibility that discrimination in the opposite direction can alter the downstream market structure toward greater efficiency. Discriminatory pricing, then, involves charging a higher price to the less efficient firms. Such pricing is shown to be both potentially profitable for the upstream firm and welfare improving as average consumer prices fall.     

Markups and export-pricing strategies

We analyze empirically export-price strategies across export destinations using detailed firm-product data. Most recent studies using disaggregated data to investigate why firms charge different prices for the same product on different markets focus on the cost component of prices and neglect the markup component. In this paper, we concentrate on the markup component and examine how variations in firms’ export prices may reflect price discrimination by comparing the markup of firms with different pricing strategies. We make use of detailed firm-level data for exporting firms in the Swedish food sector consisting of both manufacturing and intermediary trading firms. The paper documents the export-price variations within the two sub-sectors and explores how different price strategies correlate with markups. The results offer new information beyond the fact that exporters tend to have a higher markup. In particular, we find that firms in the food-processing sector with a greater ability to discriminate across markets mark their products up even more. This result points to the importance of underlying firm decisions in order to explain differences in export premiums across firms. In addition, the results reveal that markups are a complex function of firm and destination characteristics, and that the relationship between markups and pricing strategies in the manufacturing sector is not necessarily observed in other sectors of the supply chain.     

Skilled-Labor Intensity Differences Across Firms,Endogenous Product Quality,and Wage Inequality

This paper proposes a theory to explain the relative wage-rate increase for skilled labor that results from trade liberalization that relies on within-sector reallocations of production resources (skilled and unskilled labor) across firms. Motivated by some stylized facts, in a model with firm heterogeneity, including firms that differ in their skill intensity even within a narrowly defined industry, firms with relatively high skill intensity that are more likely to be exporters, and a positive association between a firm’s skill intensity and its product quality, I develop a general equilibrium model where firms with a higher skill intensity endogenously choose a higher-quality product, and tend to be more profitable. In this framework, a reduction in trade costs allows members of the workforce to reallocate to more efficient firms that produce higher-quality products, using their skilled labor more intensively, resulting in a rising skill premium. The main sources of the increasing wage inequality that followed trade openness are a positive link between a firm’s skill intensity, its product quality, and quality competition.     

Two-Part Pricing with Costly Arbitrage

This paper considers the optimal two-part pricing strategy of a monopolist whose customers collude when they purchase the firm's product. In contrast to the sentiment in the existing price discrimination literature, I find that a monopolist's profit can actually increase when consumers share its good. When transaction costs for collusion are zero the firm can extract the full consumer surplus through two-part prices. When transaction costs are positive or there are a substantial number of consumers without access to resale, the firm may be hurt by arbitrage.     

垄断性卡组织多产品定价策略

银行卡市场具有典型的双边市场特征,卡组织必须制定适当的价格策略方能吸引消费者与商户加入平台。本文运用双边市场理论分别讨论了单卡与双卡情形下垄断性卡组织的定价策略。结果发现,单卡情形下,持卡人借记卡使用费费率低于信用卡费率,而借记卡商户扣率高于信用卡商户扣率,愿意受理借记卡的商户比率要低于受理信用卡的商户比率。在商户市场势力足够小的情况下,最优的双卡商户扣率比单卡条件下的商户扣率低。     

New Products and Corruption: Evidence from Indian Firms

It has been shown that corruption has a negative effect on firm growth, but what about its impact on product innovation? I find that corruption, functioning as a bribe tax, diminishes the probability of new products being introduced. I use a World Bank Enterprise Survey conducted in India in 2005, with 1,600 firms answering both whether they introduced a new product to the firm, and whether and how much was paid in bribes. Controlling for innovation determinants and firm characteristics, sector‐state bribery averages have a negative and significant impact on product innovation.     

“Low-Balling” and Efficiency in a Two-Period Specialization Model of Auditing Competition*

This paper develops a simple, two-period specialization model to analyze the effect of start-up costs on auditing competition. Audit firms in the model make strategic specialization and pricing decisions. Through specialization, an audit firm achieves a comparative cost advantage over its competitors for all clients whose characteristics are closer to its area of specialization. This comparative cost advantage is further fortified by the presence of start-up costs. As a result, each audit firm obtains some market power and is able to price-discriminate across clients by offering “specialization-and-relationship-specific” audit fee schedules. This paper demonstrates that the practice of “low-balling” is a natural consequence of competition among audit firms. However, low-balling occurs only in a certain market segment where audit firms compete fiercely. This paper also shows that a policy of banning low-balling acts as a substitute for the commitment of the audit firms to partially collude their pricing policies and results in increased profits for audit firms and increased fees. However, it also results in audit firms choosing specializations in a more efficient way, thereby reducing total auditing costs.     

Entry deterrence when the potential entrant is your competitor in a different market

In this article, we present a two‐period model in which one firm operates in two markets: a monopoly and a duopoly. Assuming that this firm has private information on the cross‐price elasticity of demand between the products sold in both markets, it limits its quantity supplied in the monopoly market in order to make its rival in the other market believe that entry into the monopolized market is unprofitable. As a result of this strategy, the average prices observed in both markets increase. This result suggests that the detrimental effects of entry deterrence on consumers' welfare are stronger than those predicted by previous literature.     

数字产品定价博弈分析

数字产品的物理特性和经济特征决定了其不适合传统的定价方法。通过分析数字产品的交易特点发现,可以通过运用罗宾斯泰英的讨价还价模型,分析数字产品的定价方法,并得出结论:厂商和消费者博弈双方对销售收益的分配份额取决于双方的贴现因子。     

Waiting for Signaling Quality

When a durable good of uncertain quality is introduced to the market, some consumers strategically delay their buying until the next period, with the hope of learning the unknown quality. I analyze the monopolist's pricing and waiting strategies when consumers have strategic delay incentives. I show when the monopolist offers introductory low prices in pooling equilibria. I also find two types of separating equilibria: one where the high‐type monopolist signals its quality by choosing a different price than the low‐type monopolist in the first period and another where the high‐type monopolist announces the product in the first period and waits to sell only in the second period. Waiting creates a credible cost for signaling; hence, the monopolist uses it as a signaling device.     

THE ECONOMICS OF IMPORT PARITY PRICING: A PEDAGOGICAL NOTE

This paper demonstrates that pricing to import parity is not necessarily prima facie evidence of the exercise of market power. It is shown that in the presence of imports both market structures, perfect competition and monopoly, can price to import parity. If markets can be segmented enabling the firm to discriminate between the export and domestic market it is shown that the imperfectly competitive firm can differentially price. Furthermore, as the number of domestic firms is increased, and if these firms are able to segment the market, the differential between domestic and foreign prices is reduced. The import parity price may or may not be charged in the domestic market. A measure of the exercise of market power is therefore the differential between export parity and the domestic price.     

基于双边市场理论的互联网定价模式与反垄断问题研究

文章首先厘清中国电信业的双边市场特征,然后通过构建双边市场模型分析了垄断平台和竞争性平台的均衡价格,同时考虑了不同收费形式下中国电信业的定价策略,最后分析了其双边市场中反垄断政策的含义.研究主要结论是:双边市场定价通常对需求价格弹性较小一边的价格加成比较高;网络外部性越强,价格结构越不对称;价格结构与用户数量或平台交易量是动态相互影响;差异化程度越大,平台对用户的价格加成越大.这对于我国“三网融合”的背景下电信产业市场结构、定价策略和反垄断问题具有一定的借鉴意义.     

Optimal commercial policy with imperfect foreign supply

Conclusion Maximizing social welfare when there is one foreign firm requires the imposition of fixed domestic price, which results in increased imports from the foreign firm until it engages in marginal cost pricing. A license fee captures (replaces) the foreign firm's economic profit (loss). Extension to the case where foreign supply consists of more than one firm differs from the one-firm analysis in that, while optimale policy consists of the setting of both a license fee and price level for the import, this may entail levying a tariff on imports from the foreign firms. The fee or tariff, but not both, may be negative.     

Too big to change: How heterogeneous firms respond to time-of-use electricity price

To manage the peak load by demand response, time-of-use (TOU) pricing with hourly and seasonal adjustments has been applied in industrial and commercial sectors in Shanghai. However, the requirement of continuous production and exogenous output level might be a serious barrier for responding to TOU price, as these are different across industrial sectors, firm scale or even seasons. Thus, the extent to which heterogeneous firms respond to price signals is still ambiguous and worthy of exploration. Based on a regression discontinuity approach, we disentangle the firm-level effects of TOU pricing for industrial and commercial firms. While the overall result shows a nonsignificant average response to TOU pricing, the firm-level analysis concerning individual heterogeneity indicates that smaller firms are much more sensitive to TOU pricing than larger firms. Moreover, this effect is much more significant in the commercial sector. This study expands understanding of the heterogeneous effects of TOU pricing with consideration of firm-level information and fills the gap between different estimation results from the previous literature. The results also indicate a price policy failure and unbalanced effects on industrial and commercial firms.     

Pricing to market, firm heterogeneity and the role of quality

We build a pricing-to-market (PTM) model with firm heterogeneity, which allows for imperfect competition and market segmentation in the presence of flexible exchange rates, horizontal and vertical differentiation and different tastes of consumers in destination markets. We derive firm’s pricing behaviour in response to price and quality competition shocks. We show that there is PTM heterogeneity across firms if quality has a role. We empirically assess the main predictions of our theoretical framework on Italian firm-level data. We document that export-domestic price margins are significantly affected by price and quality competitiveness factors even controlling for foreign demand conditions, size, export intensity, destination markets and unobservables. Finally, we provide evidence of strong heterogeneity across firms in their reaction to price and quality competitiveness.     

两部制许可契约下技术转移差异化和统一许可定价策略比较研究

针对技术转移过程中的差异化和统一许可定价问题，本文分别构建了两阶段差异化定价和统一定价博弈模型，讨论了两部制许可契约下的最优技术许可定价决策及社会效率配置问题。研究发现，相对于统一许可定价，差异化许可定价能够促进研发企业和生产企业一体化协调；差异化许可定价允许生产配置效率更高的企业生产更多的产量，进而提高了社会配置效率；差异化许可定价下，尽管研发企业可以降低对生产配置效率更高的企业的提成，但是可以向其收取较高的固定费用，进而可以缓解因过度的许可定价差异所引起的“水床效应”；当生产企业的产品替代性较强时，研发企业的统一许可定价更有利于改善社会福利，但加剧了市场竞争；除此之外，差异化许可定价更有利于改善社会福利。     

Joint product signals of quality

Summary The relationship between product quality, signals, and the firm's optimal pricing policy has been given much attention in economics. The literature is extended in this paper by considering the signaling problem of a firm that jointly produces two commodities—one of known quality to consumers (a search good) and one of unknown quality (an experience good). The model presented employs a stylized reputation function, a linear cost structure, and linear demand schedules to produce two interesting insights. First, the search good's price can potentially be used as a signal of the quality of the experience good. Second, the price of a search good will depend upon whether it is jointly produced with another search good or an experience good or whether it is produced in isolation by a single product firm. Furthermore, evidence from a paper on gasoline pricing seems to support this contention.     

Decentralization and Transfer Pricing Under Oligopoly

This paper presents a simple model of a partially decentralized multinational firm (MNF) in competition with a rival firm. It is shown that transfer pricing can be used as a rent-shifting device by the MNF to compete with the rival. This arises because the MNF headquarters uses the transfer price to manage different subsidiaries. The specific value of the transfer price chosen by the MNF depends on whether the rival firm produces the intermediate good, the final good, or both and whether the rival is integrated or not. In particular, both decentralization and competition with a fully integrated rival result in lower transfer prices.     

Symbiotic Production and Downstream Market Competition

It is well known that the double marginalization problem in the vertical relation can be eliminated by collusion, but it is undesirable because of the monopoly pricing outcome. This study addresses the role of downstream market competition under symbiotic production and demonstrates that incorporating different types of competition in product markets will partially eliminate inefficiency caused by double marginalization. It suggests that introducing callback services or internet telephones creates an environment similar to downward market competition in the output market; hence, it is observed that international tariffs are significantly reduced.