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An empirical investigation of the welfare effects of banning wholesale price discrimination

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  • Villas-Boas, Sofia B

    ()
    (University of California, Berkeley. Dept of agricultural and resource economics and policy)

Abstract

Economic theory does not provide sharp predictions on the welfare effects of banning wholesale price discrimination: if downstream costs differences exist then discrimination shifts production inefficiently, towards high cost retailers, so a ban increases welfare; if differences in price elasticity of demand across retailers exist, discrimination may increase welfare if more market is covered, so a ban reduces welfare. Using retail prices and quantities of coffee brands sold by German retailers, I estimate a model of demand and supply and separate cost and demand differences. Simulating a ban on wholesale price discrimination has positive welfare effects in this market, and less if downstream cost differences shrink, or with less competition.

(This abstract was borrowed from another version of this item.)

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Bibliographic Info

Paper provided by University of California at Berkeley, Department of Agricultural and Resource Economics and Policy in its series CUDARE Working Paper Series with number 1017R3.

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Length: 38pages
Date of creation: Aug 2006
Date of revision: Oct 2008
Handle: RePEc:are:cudare:1017r3

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Keywords: oligopoly price discrimination price policy wholesale prices coffee;

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References

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  1. Nevo, Aviv, 2001. "Measuring Market Power in the Ready-to-Eat Cereal Industry," Econometrica, Econometric Society, vol. 69(2), pages 307-42, March.
  2. Bonnet, Celine & Dubois, Pierre & Simioni, Michel, 2006. "Two-Part Tariffs versus Linear Pricing Between Manufacturers and Retailers: Empirical Tests on Differentiated Products Markets," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25685, International Association of Agricultural Economists.
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  6. Villas-Boas, Sofia B. & Hellerstein, Rebecca, 2004. "Identification of supply models of retailer and manufacturer oligopoly pricing," CUDARE Working Paper Series 0993, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy.
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Citations

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Cited by:
  1. Emanuela Ciapanna & Concetta Rondinelli, 2011. "Retail sector concentration and price dynamics in the euro area: a regional analysis," Questioni di Economia e Finanza (Occasional Papers) 107, Bank of Italy, Economic Research and International Relations Area.
  2. Graddy, Kathryn & Hall, George, 2011. "A dynamic model of price discrimination and inventory management at the Fulton Fish Market," Journal of Economic Behavior & Organization, Elsevier, vol. 80(1), pages 6-19.
  3. Andrea Fosfuri & Marco S. Giarratana & Esther Roca, 2010. "Community-based strategies in action: building and sustaining a product differentiation advantage," Business Economics Working Papers id-10-01, Universidad Carlos III, Instituto sobre Desarrollo Empresarial "Carmen Vidal Ballester".
  4. Bonnet, Celine & Dubois, Pierre & Villas-Boas, Sofia B., 2009. "Empirical evidence on the role of non linear wholesale pricing and vertical restraints on cost pass-through," CUDARE Working Paper Series 1089, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy.
  5. Chin Yang & Anthony Loviscek & Hui Cheng & Ken Hung, 2012. "A Note on Allen’s Arc Elasticity with Arithmetic, Geometric and Harmonic Means," Atlantic Economic Journal, International Atlantic Economic Society, vol. 40(2), pages 161-171, June.
  6. Igal Hendel & Aviv Nevo, 2013. "Intertemporal Price Discrimination in Storable Goods Markets," American Economic Review, American Economic Association, vol. 103(7), pages 2722-51, December.
  7. Philip G. Gayle, 2013. "On the Efficiency of Codeshare Contracts between Airlines: Is Double Marginalization Eliminated?," American Economic Journal: Microeconomics, American Economic Association, vol. 5(4), pages 244-73, November.
  8. Matthew Grennan, 2013. "Price Discrimination and Bargaining: Empirical Evidence from Medical Devices," American Economic Review, American Economic Association, vol. 103(1), pages 145-77, February.
  9. Karp, Larry & Perloff, Jeffrey, 2011. "The iPhone Goes Downstream: Mandatory Universal Distribution∗," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt7vc007jh, Department of Agricultural & Resource Economics, UC Berkeley.

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