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A Guide to the Pitfalls of Identifying Price Discrimination

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  • Lott, John R, Jr
  • Roberts, Russell D
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    Abstract

    This paper demonstrates that plausible cost-based explanations exist for what are commonly perceived to be cases of price discrimination. The authors explain such commonly discussed problems as the price spreads of retail gasoline products, the "high" price of dinners at restaurants, the "high" price of popcorn at movie theaters, and the fact that airline ticket prices vary with how long the ticket is purchased before the flight's departure. Their explanations benefit from not relying on consumer ignorance or implicit collusion among numerous sellers. Copyright 1991 by Oxford University Press.

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    Bibliographic Info

    Article provided by Western Economic Association International in its journal Economic Inquiry.

    Volume (Year): 29 (1991)
    Issue (Month): 1 (January)
    Pages: 14-23

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    Handle: RePEc:oup:ecinqu:v:29:y:1991:i:1:p:14-23

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    Cited by:
    1. Stole, Lars A., 2007. "Price Discrimination and Competition," Handbook of Industrial Organization, Elsevier.
    2. Karp, Larry S. & Perloff, Jeffrey M, 2003. "When promoters like scalpers," CUDARE Working Paper Series 916R, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy.
    3. Asplund, Marcus & Eriksson, Rickard & Strand, Niklas, 2001. "Price Discrimination in Oligopoly: Evidence from Swedish Newspapers," Working Paper Series in Economics and Finance 468, Stockholm School of Economics, revised 01 Jan 2007.
    4. Cohen, Andrew, 2008. "Package size and price discrimination in the paper towel market," International Journal of Industrial Organization, Elsevier, vol. 26(2), pages 502-516, March.
    5. McCormick, Robert E. & Tollison, Robert D., 2001. "Why do black basketball players work more for less money?," Journal of Economic Behavior & Organization, Elsevier, vol. 44(2), pages 201-219, February.
    6. Li, Michael Z. F., 2001. "Pricing non-storable perishable goods by using a purchase restriction with an application to airline fare pricing," European Journal of Operational Research, Elsevier, vol. 134(3), pages 631-647, November.
    7. Ralph-C Bayer, 2006. "Intertemporal Price Discrimination and Competition," School of Economics Working Papers 2006-06, University of Adelaide, School of Economics.
    8. Aviv Nevo & Catherine Wolfram, 1999. "Prices and Coupons for Breakfast Cereals," NBER Working Papers 6932, National Bureau of Economic Research, Inc.
    9. Kris Gerardi & Adam Hale Shapiro, 2007. "The effects of competition on price dispersion in the airline industry: a panel analysis," Working Papers 07-7, Federal Reserve Bank of Boston.
    10. Clerides, Sofronis K., 2002. "Book value: intertemporal pricing and quality discrimination in the US market for books," International Journal of Industrial Organization, Elsevier, vol. 20(10), pages 1385-1408, December.

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