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Market Structure and Advance Selling

Author

Listed:
  • Marc Möller

    (University of Bern, Switzerland)

  • Makoto Watanabe

    (VU University Amsterdam, the Netherlands)

Abstract

When products are sold in advance, i.e. prior to consumption, consumers trade off an early, uninformed purchase at a low price against a late, informed purchase at a high price. This paper considers the effect of market structure on the prevalence of advance selling. We show that in an oligopolistic market with multi-product firms, advance selling (with its associated allocative inefficiency) is decreasing in market concentration when the consumers’ preference uncertainty is high but can be increasing when uncertainty is low.

Suggested Citation

  • Marc Möller & Makoto Watanabe, 2016. "Market Structure and Advance Selling," Tinbergen Institute Discussion Papers 16-020/VII, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20160020
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    References listed on IDEAS

    as
    1. Marc Möller & Makoto Watanabe, 2016. "Competition in the presence of individual demand uncertainty," RAND Journal of Economics, RAND Corporation, vol. 47(2), pages 273-292, May.
    2. Marc Möller & Makoto Watanabe, 2010. "Advance Purchase Discounts Versus Clearance Sales," Economic Journal, Royal Economic Society, vol. 120(547), pages 1125-1148, September.
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    7. Courty, Pascal, 2003. "Ticket Pricing under Demand Uncertainty," Journal of Law and Economics, University of Chicago Press, vol. 46(2), pages 627-652, October.
    8. Holmes, Thomas J, 1989. "The Effects of Third-Degree Price Discrimination in Oligopoly," American Economic Review, American Economic Association, vol. 79(1), pages 244-250, March.
    9. Gale, Ian L & Holmes, Thomas J, 1993. "Advance-Purchase Discounts and Monopoly Allocation of Capacity," American Economic Review, American Economic Association, vol. 83(1), pages 135-146, March.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Competition; Price Discrimination; Individual Demand Uncertainty; Advance Purchase Discounts;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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