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Intertemporal Price Discrimination and Competition

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Author Info
Ralph-C Bayer () (School of Economics, University of Adelaide)

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Abstract

In this study we investigate the impact of competition on markets for non-durable goods where intertemporal price discrimination is possible. We develop a simple model of different potential scenarios for intertemporal price discrimination and implement it in a laboratory experiment. We compare the outcomes in monopolies and duopolies. Surprisingly, we find that competition does not necessarily prevent intertemporal price discrimination, as our model predicts. However, competition generally reduces sales prices, but by far less than theory predicts. As expected, competition increases efficiency.

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File URL: http://www.economics.adelaide.edu.au/research/papers/doc/econwp06-06.pdf
File Format: application/pdf
File Function: First version, May 2006
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Publisher Info
Paper provided by University of Adelaide, School of Economics in its series Working Papers with number 2006-06.

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Date of creation: May 2006
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Handle: RePEc:adl:wpaper:2006-06

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Postal: Adelaide SA 5005
Phone: (618) 8303 5540
Web page: http://www.economics.adelaide.edu.au/
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Related research
Keywords: Price Discrimination; Oligopoly; Market Experiments.;

Find related papers by JEL classification:
L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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  5. Borenstein, Severin & Rose, Nancy L, 1994. "Competition and Price Dispersion in the U.S. Airline Industry," Journal of Political Economy, University of Chicago Press, vol. 102(4), pages 653-83, August. [Downloadable!] (restricted)
    Other versions:
  6. Stahl, Dale O, II, 1989. "Oligopolistic Pricing with Sequential Consumer Search," American Economic Review, American Economic Association, vol. 79(4), pages 700-712, September. [Downloadable!] (restricted)
  7. James D. Dana & Jr., 1998. "Advance-Purchase Discounts and Price Discrimination in Competitive Markets," Journal of Political Economy, University of Chicago Press, vol. 106(2), pages 395-422, April. [Downloadable!] (restricted)
  8. Ernst Fehr & Jean-Robert Tyran, 2001. "Does Money Illusion Matter?," American Economic Review, American Economic Association, vol. 91(5), pages 1239-1262, December. [Downloadable!] (restricted)
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  9. Ernst Fehr & Klaus M. Schmidt, . "A Theory of Fairness, Competition and Cooperation," IEW - Working Papers iewwp004, Institute for Empirical Research in Economics - IEW. [Downloadable!]
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  10. Burdett, Kenneth & Judd, Kenneth L, 1983. "Equilibrium Price Dispersion," Econometrica, Econometric Society, vol. 51(4), pages 955-69, July. [Downloadable!] (restricted)
  11. Dudey, Marc, 1996. "Dynamic Monopoly with Nondurable Goods," Journal of Economic Theory, Elsevier, vol. 70(2), pages 470-488, August. [Downloadable!] (restricted)
  12. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June. [Downloadable!] (restricted)
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