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Wholesale Price Discrimination between High Street Retailers and Online Retailers

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Listed author(s):
  • Hiroshi Aiura

    ()

    (Graduate School of Environmental Studies, Nagoya University)

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    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.

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    File URL: http://www.accessecon.com/pubs/EB/2007/Volume12/EB-07L80003A.pdf
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    Article provided by AccessEcon in its journal Economics Bulletin.

    Volume (Year): 12 (2007)
    Issue (Month): 31 ()
    Pages: 1-8

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    Handle: RePEc:ebl:ecbull:eb-07l80003
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    Keywords:

    Find related papers by JEL classification:

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

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    1. Bouckaert, Jan, 2000. "Monopolistic competition with a mail order business," Economics Letters, Elsevier, vol. 66(3), pages 303-310, March.
    2. 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.
    3. Stéphane Caprice, 2006. "Multilateral Vertical Contracting with an Alternative Supply: The Welfare Effects of a Ban on Price Discrimination," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 28(1), pages 63-80, 02.
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    Cited by:

    1. Adachi, Takanori & Ebina, Takeshi, 2014. "Cost pass-through and inverse demand curvature in vertical relationships with upstream and downstream competition," Economics Letters, Elsevier, vol. 124(3), pages 465-468.
    2. Bacchiega, Emanuele & Randon, Emanuela & Zirulia, Lorenzo, 2012. "Strategic accessibility competition," Research in Economics, Elsevier, vol. 66(2), pages 195-212.
    3. 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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