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Quality-based Price Discrimination: Evidence from Internet Retailers’ Shipping Options

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  • Li, Han
  • Dinlersoz, Emin

Abstract

This paper tests various implications of quality-based price discrimination theory in the context of internet book retailers’ shipping menus. Many internet retailers create quality variants of a homogeneous good by bundling it with several shipping options that differ by delivery time. This practice can allow retailers to extract further surplus from consumers through quality-based price discrimination. We find that the design of shipping menus offered by large retailers is consistent with main implications of quality-based price discrimination theory. Fringe sellers, however, do not appear to engage in price discrimination based on quality.

Suggested Citation

  • Li, Han & Dinlersoz, Emin, 2012. "Quality-based Price Discrimination: Evidence from Internet Retailers’ Shipping Options," Journal of Retailing, Elsevier, vol. 88(2), pages 276-290.
    • Handle: RePEc:eee:jouret:v:88:y:2012:i:2:p:276-290
    DOI: 10.1016/j.jretai.2011.12.002
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    4. Hai Liu & Shuaitong Liang & Shouzhong Hu, 2014. "Research on the Custom Pricing Model of Online Retail Clothing," Journal of Business Administration Research, Journal of Business Administration Research, Sciedu Press, vol. 3(2), pages 28-35, October.

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