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Wholesale Price Discrimination between High Street Retailers and Online Retailers

Author

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  • Hiroshi Aiura

    (Graduate School of Environmental Studies, Nagoya University)

Abstract

We analyze wholesale pricing and retail pricing when a monopolistic manufacturer sells its product to a high street retailer and an online electronic retailer, which have different selling qualities and marginal selling costs. We observe that (1) the wholesale price for an online electronic retailer is higher than that for a high street retailer if an online electronic retailer's selling cost advantage is greater than its selling quality disadvantage for all consumers buying products, and (2) the retail price of the e-retailer is necessarily lower than that of the c-retailer independent of conditions.

Suggested Citation

  • Hiroshi Aiura, 2007. "Wholesale Price Discrimination between High Street Retailers and Online Retailers," Economics Bulletin, AccessEcon, vol. 12(31), pages 1-8.
    • Handle: RePEc:ebl:ecbull:eb-07l80003
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    References listed on IDEAS

    as
    1. Yoshihiro Yoshida, 2000. "Third-Degree Price Discrimination in Input Markets: Output and Welfare," American Economic Review, American Economic Association, vol. 90(1), pages 240-246, March.
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    3. Wei-yu Kevin Chiang & Dilip Chhajed & James D. Hess, 2003. "Direct Marketing, Indirect Profits: A Strategic Analysis of Dual-Channel Supply-Chain Design," Management Science, INFORMS, vol. 49(1), pages 1-20, January.
    4. DeGraba, Patrick, 1990. "Input Market Price Discrimination and the Choice of Technology," American Economic Review, American Economic Association, vol. 80(5), pages 1246-1253, December.
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    Cited by:

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    4. Haiyan Wang & Tatsuhiko Nariu, 2012. "Distribution Channel Management in an Internet Age: Equilibrium and Social Welfare," Journal of Industry, Competition and Trade, Springer, vol. 12(3), pages 285-298, September.

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    More about this item

    JEL classification:

    • L8 - Industrial Organization - - Industry Studies: Services
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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