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Does price discrimination make collusion less likely? a delivered pricing model

Author

Listed:
  • John S. Heywood

    (University of Wisconsin-Milwaukee)

  • Dongyang Li

    (Renmin University of China)

  • Guangliang Ye

    (Hainan University)

Abstract

This paper compares the stability of collusion under delivered spatial price discrimination and under uniform pricing. Uniquely using a model of elastic demand, we show that collusion under price discrimination can be more stable thus facilitating collusion and making it more likely. This result holds only when the entire market is competitive. Whenever there exist natural monopoly portions of the spatial market, collusion on the remaining market is less stable with spatial price discrimination making such collusion less likely relative to uniform pricing.

Suggested Citation

  • John S. Heywood & Dongyang Li & Guangliang Ye, 2020. "Does price discrimination make collusion less likely? a delivered pricing model," Journal of Economics, Springer, vol. 131(1), pages 39-60, September.
    • Handle: RePEc:kap:jeczfn:v:131:y:2020:i:1:d:10.1007_s00712-020-00699-4
    DOI: 10.1007/s00712-020-00699-4
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    References listed on IDEAS

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    Cited by:

    1. John S. Heywood & Dongyang Li & Guangliang Ye, 2021. "Spatial pricing and collusion," Metroeconomica, Wiley Blackwell, vol. 72(2), pages 425-440, May.
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    3. Esteves, Rosa-Branca & Shuai, Jie, 2022. "Personalized pricing with a price sensitive demand," Economics Letters, Elsevier, vol. 213(C).

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    More about this item

    Keywords

    Uniform pricing; Spatial price discrimination; Collusion stability;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis

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