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A Dynamic Model of Price Discrimination and Inventory Management at the Fulton Fish Market

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  • Graddy, Kathryn
  • Hall, George

Abstract

We estimate a dynamic profit-maximization model of a fish wholesaler who can observe consumer characteristics, set individual prices, and thus engage in third-degree price discrimination. Simulated prices and quantities from the model exhibit the key features observed in a set of high quality transaction-level data on fish sales collected at the Fulton fish market. The model?s predictions are then compared to the case in which the dealer must post a single price to all customers. We find the cost to the dealer of posting a uniform price to be extremely small.

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  • Graddy, Kathryn & Hall, George, 2009. "A Dynamic Model of Price Discrimination and Inventory Management at the Fulton Fish Market," CEPR Discussion Papers 7315, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:7315
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    Cited by:

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    2. Elsler, Laura G. & Drohan, Sarah E. & Schlüter, Maja & Watson, James R. & Levin, Simon A., 2019. "Local, Global, Multi-Level: Market Structure and Multi-Species Fishery Dynamics," Ecological Economics, Elsevier, vol. 156(C), pages 185-195.
    3. Ayelet Israeli & Fiona Scott-Morton & Jorge Silva-Risso & Florian Zettelmeyer, 2022. "How Market Power Affects Dynamic Pricing: Evidence from Inventory Fluctuations at Car Dealerships," Management Science, INFORMS, vol. 68(2), pages 895-916, February.
    4. Tang, Le & Jefferson, Gary, 2024. "A DSGE model of energy efficiency with vintage capital in Chinese industry," Economic Modelling, Elsevier, vol. 132(C).
    5. Benjamin Reed Shiller, 2013. "First Degree Price Discrimination Using Big Data," Working Papers 58, Brandeis University, Department of Economics and International Business School, revised Jan 2014.
    6. Tang, Le, 2021. "Investment dynamics and capital distortion: State and non-state firms in China," Journal of Asian Economics, Elsevier, vol. 73(C).

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    More about this item

    Keywords

    Price discrimination; Dynamic programming; Fish; Yield management; indirect inference;
    All these keywords.

    JEL classification:

    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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