American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Revisiting the Relationship between Competition and Price Discrimination
American Economic Journal: Microeconomics
vol. 10,
no. 2, May 2018
(pp. 190–224)
(Complimentary)
Abstract
We revisit the relationship between competition and price discrimination. Theoretically, we show that if consumers differ in terms of both their underlying willingness-to-pay and their brand loyalty, competition may increase price differences between some consumers while decreasing them between others. Empirically, we find that competition has little impact at the top or the bottom of the price distribution but a significant impact in the middle, thus increasing some price differentials but decreasing others. Our findings highlight the importance of understanding the relevant sources of consumer heterogeneity and can reconcile earlier conflicting findings.Citation
Chandra, Ambarish, and Mara Lederman. 2018. "Revisiting the Relationship between Competition and Price Discrimination." American Economic Journal: Microeconomics, 10 (2): 190–224. DOI: 10.1257/mic.20160252Additional Materials
JEL Classification
- D12 Consumer Economics: Empirical Analysis
- D22 Firm Behavior: Empirical Analysis
- D43 Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
- L13 Oligopoly and Other Imperfect Markets
- L93 Air Transportation
- M31 Marketing
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