Strategic Delays of Delivery, Market Separation and Demand Discrimination
AbstractWe show that an adequate choice of delays to deliver a durable good allows a monopolist to soften the intra-brand price competition between his two retailers on two different markets, when consumers suffer a switching cost to buy on the market where they are not located. To prevent each retailer from selling on both markets, the upstream producer increases the delay of delivery on the market where the willingness to pay is the lowest. It therefore separates the markets across time, by orientating consumers to the appropriate downstream retailer. Consumers pay their highest valuation, and a price differential higher than the switching cost persists in equilibrium. We discuss the application of our findings to the European car market.
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Bibliographic InfoPaper provided by Department of Economics, University of Bristol, UK in its series The Centre for Market and Public Organisation with number 04/112.
Length: 30 pages
Date of creation: Nov 2004
Date of revision:
durable good; switching cost; discrimination; intrabrand competition; European car market;
Other versions of this item:
- Mitraille, Sebastien & Eric Avenel, 2003. "Strategic delays of delivery, market separation and demand discrimination," Royal Economic Society Annual Conference 2003 155, Royal Economic Society.
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
- L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
- L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-12-12 (All new papers)
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