[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/hhs/osloec/2016_012.html
   My bibliography  Save this paper

Another model of sales. Price discrimination in a differentiated duopoly market

Author

Listed:
Abstract
Using a model of horizontal differentiation where a variety dimension is added to Hotelling's (1929) "linear city" duopoly model, I show that even when costs and demand are symmetric, price discrimination may be an equilibrium phenomenon. In the model each customer have a preferred variety and a preferred firm. They have perfect information about all prices and may be induced to switch variety and firm given a sufficient price difference. Price discrimination equilibrium exists when a sufficient fraction of consumers are elastic both with respect to variety and firm.

Suggested Citation

  • Mehlum, Halvor, 2016. "Another model of sales. Price discrimination in a differentiated duopoly market," Memorandum 12/2016, Oslo University, Department of Economics.
    • Handle: RePEc:hhs:osloec:2016_012
    as

    Download full text from publisher

    File URL: http://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2016/memo-12-2016.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Neven, Damien J., 1986. "On Hotelling's competition with non-uniform customer distributions," Economics Letters, Elsevier, vol. 21(2), pages 121-126.
    2. Varian, Hal R, 1980. "A Model of Sales," American Economic Review, American Economic Association, vol. 70(4), pages 651-659, September.
    3. Salop, S & Stiglitz, J E, 1982. "The Theory of Sales: A Simple Model of Equilibrium Price Dispersion with Identical Agents," American Economic Review, American Economic Association, vol. 72(5), pages 1121-1130, December.
    4. Marcel Canoy & Martin Peitz, 1997. "The Differentiation Triangle," Journal of Industrial Economics, Wiley Blackwell, vol. 45(3), pages 305-328, September.
    5. Michael D. Noel, 2007. "Edgeworth Price Cycles, Cost-Based Pricing, and Sticky Pricing in Retail Gasoline Markets," The Review of Economics and Statistics, MIT Press, vol. 89(2), pages 324-334, May.
    6. Unknown, 1986. "Letters," Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 1(4), pages 1-9.
    7. Barron, John M & Taylor, Beck A & Umbeck, John R, 2000. "A Theory of Quality-Related Differences in Retail Margins: Why There Is a "Premium" on Premium Gasoline," Economic Inquiry, Western Economic Association International, vol. 38(4), pages 550-569, October.
    8. Mian Dai & Qihong Liu & Konstantinos Serfes, 2014. "Is the Effect of Competition on Price Dispersion Nonmonotonic? Evidence from the U.S. Airline Industry," The Review of Economics and Statistics, MIT Press, vol. 96(1), pages 161-170, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Noel, Michael D. & Qiang, Hongjie, 2019. "The role of information in retail gasoline price dispersion," Energy Economics, Elsevier, vol. 80(C), pages 173-187.
    2. Nicolas de Roos & Vladimir Smirnov, 2020. "Collusion with intertemporal price dispersion," RAND Journal of Economics, RAND Corporation, vol. 51(1), pages 158-188, March.
    3. Hosken, Daniel S. & McMillan, Robert S. & Taylor, Christopher T., 2008. "Retail gasoline pricing: What do we know?," International Journal of Industrial Organization, Elsevier, vol. 26(6), pages 1425-1436, November.
    4. Toshihiro Matsumura & Noriaki Matsushima, 2010. "Patent licensing, bargaining, and product positioning," ISER Discussion Paper 0775, Institute of Social and Economic Research, Osaka University.
    5. Eleftherios Zacharias, 2013. "Strategic Positioning of Goods in a Market with a Niche," Working Paper series 36_13, Rimini Centre for Economic Analysis.
    6. G. Bertuzzi & L. Lambertini, 2001. "Advertising in a Differential Game of Spatial Competition," Working Papers 400, Dipartimento Scienze Economiche, Universita' di Bologna.
    7. Berck, Peter & Brown, Jennifer & Perloff, Jeffrey M. & Villas-Boas, Sofia Berto, 2008. "Sales: Tests of theories on causality and timing," International Journal of Industrial Organization, Elsevier, vol. 26(6), pages 1257-1273, November.
    8. Stole, Lars A., 2007. "Price Discrimination and Competition," Handbook of Industrial Organization, in: Mark Armstrong & Robert Porter (ed.), Handbook of Industrial Organization, edition 1, volume 3, chapter 34, pages 2221-2299, Elsevier.
    9. Øystein Foros & Mai Nguyen-Ones & Frode Steen, 2021. "The Effects of a Day off from Retail Price Competition: Evidence on Consumer Behavior and Firm Performance in Gasoline Retailing," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 28(1), pages 49-87, January.
    10. Ya-Ling Chiu & Jiangze Du & Jying-Nan Wang, 2022. "The Effects of Price Dispersion on Sales in the Automobile Industry: A Dynamic Panel Analysis," SAGE Open, , vol. 12(3), pages 21582440221, August.
    11. Eun Yeong Seong & Youngjae Lim & Chang Gyu Choi, 2022. "Why are convenience stores clustered? The reasons behind the clustering of similar shops and the effect of increased competition," Environment and Planning B, , vol. 49(3), pages 834-846, March.
    12. Barigozzi, Francesca & Ma, Ching-to Albert, 2018. "Product differentiation with multiple qualities," International Journal of Industrial Organization, Elsevier, vol. 61(C), pages 380-412.
    13. Heijnen, Pim & Soetevent, Adriaan R., 2018. "Price competition on graphs," Journal of Economic Behavior & Organization, Elsevier, vol. 146(C), pages 161-179.
    14. Jason R. Blevins & Garrett T. Senney, 2019. "Dynamic selection and distributional bounds on search costs in dynamic unit‐demand models," Quantitative Economics, Econometric Society, vol. 10(3), pages 891-929, July.
    15. Bruce I. Carlin & Florian Ederer, 2019. "Search Fatigue," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 54(3), pages 485-508, May.
    16. Timothy N. Cason & Daniel Friedman & Ed Hopkins, 2021. "An Experimental Investigation of Price Dispersion and Cycles," Journal of Political Economy, University of Chicago Press, vol. 129(3), pages 789-841.
    17. Yong Liu & Daniel Putler & Charles Weinberg, 2006. "The welfare and equity implications of competition in television broadcasting: the role of viewer tastes," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 30(2), pages 127-140, September.
    18. Stefano Colombo, 2016. "Location choices with a non-linear demand function," Papers in Regional Science, Wiley Blackwell, vol. 95, pages 215-226, March.
    19. Manish Gangwar & Nanda Kumar & Ram C. Rao, 2021. "Pricing Under Dynamic Competition When Loyal Consumers Stockpile," Marketing Science, INFORMS, vol. 40(3), pages 569-588, May.
    20. Bertuzzi, Giorgia & Lambertini, Luca, 2010. "Existence of equilibrium in a differential game of spatial competition with advertising," Regional Science and Urban Economics, Elsevier, vol. 40(2-3), pages 155-160, May.

    More about this item

    Keywords

    Duopoly; price discrimination;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hhs:osloec:2016_012. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mari Strønstad Øverås (email available below). General contact details of provider: https://edirc.repec.org/data/souiono.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.