Skimming through search

2020 ◽  
Vol 0 (0) ◽  
Author(s):  
Evangelos Rouskas
Keyword(s):  
Price Discrimination ◽  
Durable Good ◽  
Market Transparency ◽  
Search Intensity ◽  
Intertemporal Price Discrimination ◽  
Positive Externality ◽  
High Valuation ◽  
The Difference ◽  
Duopolistic Market ◽  
Second Period

AbstractI examine a two-period duopolistic market for a durable good where firms compete in prices. Consumers are heterogeneous and can be described according to the following characteristics (i) high valuation and high search intensity; (ii) high valuation and low search intensity; (iii) low valuation and high search intensity; and (iv) low valuation and low search intensity. The market exhibits a new version of the so-called Coasian dynamics. The firms engage in intertemporal price discrimination and only consumers with high valuation and low search intensity purchase the product early. This result is based on a property which dictates that the consumers with high valuation and low search intensity are the most impatient. I call this the skimming through search property. When the difference between the high and the low valuation is small, there is positive probability that the prices in the first period are lower than the prices in the second period, so each firm may set a decreasing sequence of prices in a stochastic sense. Furthermore, when the percentage of consumers with high valuation increases, all consumers pay lower prices. This inter-consumer externality resembles the positive externality caused by an increase in market transparency.

Upgrading, Degrading, and Intertemporal Price Discrimination

2003 ◽  
Vol 3 (1) ◽  
Author(s):  
Gea M Lee
Keyword(s):  
Price Discrimination ◽  
Durable Good ◽  
High Quality ◽  
Intertemporal Price Discrimination ◽  
Monopoly Pricing ◽  
Second Period ◽  
Period Model

The paper studies monopoly pricing of a vertically differentiated durable good in a two-period model. It provides an explanation for seemingly unusual practice of a firm selling a "degraded good," arguing that the presence of Coasian dynamics may lead to the sale of the degraded good that is not less costly to produce than a high-quality good. The main finding is that when the firm can identify previous customers only if they voluntarily reveal their past purchases, it sells the degraded good along with the high-quality good in the first period. When the firm sells an upgrade of the degraded good, the price of the high-quality good cannot be "too low" in the second period, since otherwise the upgrading customers would pretend to be new customers. Thus the firm can enhance first-period sales while mitigating consumers' incentive to wait until the next period.

scholarly journals Intertemporal Price Discrimination: Dynamic Arrivals and Changing Values

2016 ◽  
Vol 106 (11) ◽  
pp. 3275-3299 ◽  
Author(s):  
Daniel F. Garrett
Keyword(s):  
Price Discrimination ◽  
Infinite Horizon ◽  
Durable Good ◽  
Intertemporal Price Discrimination ◽  
Profit Maximizing ◽  
Dynamic Arrivals ◽  
Over Time

We study the profit-maximizing price path of a monopolist selling a durable good to buyers who arrive over time and whose values for the good evolve stochastically. The setting is completely stationary with an infinite horizon. Contrary to the case with constant values, optimal prices fluctuate with time. We argue that consumers’ randomly changing values offer an explanation for temporary price reductions that are often observed in practice. (JEL D82)

scholarly journals PERSPEKTIF ILMU EKONOMI DAN UNDANG-UNDANG NOMOR 5 TAHUN 1999 TENTANG LARANGAN PRAKTIK MONOPOLI DAN PERSAINGAN USAHA TIDAK SEHAT TERHADAP DISKRIMINASI HARGA

2018 ◽  
Author(s):  
Irwan Sugiarto
Keyword(s):  
Price Discrimination ◽  
Peak Load ◽  
Cost Price ◽  
Price Strategy ◽  
Price Determination ◽  
Intertemporal Price Discrimination ◽  
Price Strategies ◽  
Second Degree

Unfair business competition can cause and trigger monopoly practice where markets arecontrolled and dominated by business doers. Besides, another impact of monopoly practiceis that; the business doers tend to sell expensive products without good quality. Monopolybusiness doers often apply price strategy where the entrepeneurs at normal competitivemarkets are not possible to do that. One of price strategies is price discrimination. Pricediscrimination refers to different price determination at a product at different time to everydifferent customer, or different market, but it is not based on different cost. Price discriminationcan be distinguished into three kinds, namely first degree price discrimination, second degreeprice discrimination, and third degree price discrimination. In addition to that, there is avariant in second degree price discrimination and third degree price discrimination, namelytwo part tariff, intertemporal price discrimination, and also peak load pricing.In Act No. 5 year 1999, discrimination related to prices is regulated in two groups ofrules and articles, that is to say price discrimination which is aproved under agreement, anddiscrimination which is performed by unilateral agreement or without agreement.

A Note on the Multidimensional Monopolist Problem and Intertemporal Price Discrimination

2010 ◽  
Vol 10 (1) ◽  
Author(s):  
Mariano G Runco
Keyword(s):  
Price Discrimination ◽  
Price Strategy ◽  
Incentive Compatible ◽  
Step Functions ◽  
Intertemporal Price Discrimination ◽  
Ex Ante ◽  
Posted Prices ◽  
Price Discriminate ◽  
Heterogeneous Consumers ◽  
Over Time

This note analyzes a model of a monopolist selling multiple goods to a continuum of heterogeneous consumers. The implementation of Direct Revelation Mechanisms is analyzed in that setting, finding that it is possible for the monopolist to implement all Stochastic Incentive Compatible Mechanisms by committing to post a decreasing sequence of prices. The posted prices depend on time and have the desirable property of being step functions. When the optimal mechanisms are stochastic, it is optimal for the monopolist to price discriminate over time, contrary to the conventional wisdom that a single-good monopolist committed to an ex-ante price strategy will not price discriminate.

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