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Parking Discounts: Price Discrimination with Different Marginal Costs

Author

Listed:
  • Daniel Flores

    (Universidad Autónoma de Nuevo León)

  • Vitaliy Kalashnikov

    (Universidad Autónoma de Nuevo León)

Abstract

This paper studies the problem of a monopolist that produces a certain good and faces two types of customers: drivers and pedestrians. Drivers need parking, while pedestrians do not. Therefore, drivers represent a higher marginal cost for the firm. Among other things, this paper explains the conditions that make parking discounts worthwhile in terms of profits and welfare. Free parking can be socially optimal if two conditions are satisfied: The demand for the good by pedestrians is more concave than is the demand by drivers; and the cost of parking is relatively low.

Suggested Citation

  • Daniel Flores & Vitaliy Kalashnikov, 2017. "Parking Discounts: Price Discrimination with Different Marginal Costs," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 50(1), pages 91-103, February.
    • Handle: RePEc:kap:revind:v:50:y:2017:i:1:d:10.1007_s11151-016-9530-3
    DOI: 10.1007/s11151-016-9530-3
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Inga Molenda & Gernot Sieg, 2018. "To Pay or Not to Pay for Parking at Shopping Malls: A Rationale from the Perspective of Two-sided Markets," Journal of Transport Economics and Policy, University of Bath, vol. 52(3), pages 283-28-297.
    2. Takanori Adachi & Michal Fabinger, 2019. "Output and Welfare Implications of Oligopolistic Third-Degree Price Discrimination," Working Papers e139, Tokyo Center for Economic Research.
    3. Ding, Yanyan & Jian, Sisi, 2022. "Strategic collaboration between land owners and charging station operators: Lease or outsource?," Transportation Research Part B: Methodological, Elsevier, vol. 166(C), pages 183-211.
    4. Adachi, Takanori, 2023. "A sufficient statistics approach for welfare analysis of oligopolistic third‐degree price discrimination," International Journal of Industrial Organization, Elsevier, vol. 86(C).
    5. Flores, Daniel, 2018. "The ambiguous effects of taxing foreign buyers," Economics Letters, Elsevier, vol. 163(C), pages 179-181.
    6. Olus Inan, Murat & Inci, Eren & Robin Lindsey, C., 2019. "Spillover parking," Transportation Research Part B: Methodological, Elsevier, vol. 125(C), pages 197-228.

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    More about this item

    Keywords

    Parking; Price discrimination; Welfare;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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