IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

An Empirical Analysis of Competitive Nonlinear Pricing

  • Gaurab Aryal

    ()

In this paper I estimate a model of competitive nonlinear pricing with multidimensional adverse selection. I model competition using a Stackelberg duopoly and solve the multidimensional screening problem by aggregating the multidimensional type into a single dimensional type. I study identification and estimation of the utility and cost parameters and the joint density of consumer types. The truncated marginal densities of the aggregated types can be nonparametrically identified but not the joint density. I use the classic Cramér-von Mises and Vuong’s test to select one parametric family of copula to estimate the joint density from the unspecified marginals. Using a unique data for advertisements collected from two Yellow Pages Directories in Central Pennsylvania I find that: (a) Joe copula characterizes the joint density of adverse selection; (b) there is a substantial heterogeneity among advertisers; (c) the estimated density rationalizes why there is more competition at the lower end of the ads than at the upper end; (d) consumers treat the ads as substitutes; and (e) a counterfactual exercise suggests that there is a substantial (3.8% of the sales) loss of welfare due to asymmetric information.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://cbe.anu.edu.au/researchpapers/econ/wp610.pdf
Download Restriction: no

Paper provided by Australian National University, College of Business and Economics, School of Economics in its series ANU Working Papers in Economics and Econometrics with number 2013-610.

as
in new window

Length: 60 Pages
Date of creation: May 2013
Date of revision:
Handle: RePEc:acb:cbeeco:2013-610
Contact details of provider: Postal: Canberra, ACT 2601
Phone: +61 2 6125 3807
Fax: +61 2 6125 0744
Web page: http://rse.anu.edu.au/Email:


More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:acb:cbeeco:2013-610. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.