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Package size and price discrimination in the paper towel market

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  • Cohen, Andrew
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    Abstract

    Estimates from a structural model of consumer behavior and firm conduct are used to decompose the extent to which quantity discounts for paper towels are consistent with second degree price discrimination as opposed to cost differences across sizes. Counterfactual exercises assuming that firms offer only one package size or charge uniform prices across sizes indicate that competition in the multi-roll package size segment results in increased consumer surplus and lower prices for all consumers.

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    File URL: http://www.sciencedirect.com/science/article/B6V8P-4NC38M5-1/1/8940004f4ea1db8a4629fe476a9914a2
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    Bibliographic Info

    Article provided by Elsevier in its journal International Journal of Industrial Organization.

    Volume (Year): 26 (2008)
    Issue (Month): 2 (March)
    Pages: 502-516

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    Handle: RePEc:eee:indorg:v:26:y:2008:i:2:p:502-516

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    Web page: http://www.elsevier.com/locate/inca/505551

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    1. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716.
    2. Gerstner, Eitan & Hess, James D, 1987. "Why Do Hot Dogs Come in Packs of 10 and Buns in 8s or 12s? A Demand-Side Investigation," The Journal of Business, University of Chicago Press, vol. 60(4), pages 491-517, October.
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    Cited by:
    1. Liu, Yizao & Shen, Shu, 2012. "Price Discrimination with Asymmetric Firms: The Case of the U.S. Carbonated Soft Drinks Market," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124619, Agricultural and Applied Economics Association.
    2. Haizhen Lin & Yijia Wang, 2012. "Competition and Price Discrimination in the Parking Garage Industry," Working Papers 2012-07, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    3. Ron Borzekowski & Raphael Thomadsen & Charles Taragin, 2005. "Competition and price discrimination in the market for mailing lists," Finance and Economics Discussion Series 2005-56, Board of Governors of the Federal Reserve System (U.S.).
    4. Awudu Abdulai & Christian Kuhlgatz & Silke Schmitz, 2009. "Empirical investigation of price setting and quantity surcharges in the German food sector," Agribusiness, John Wiley & Sons, Ltd., vol. 25(3), pages 331-350.

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