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Strategic delays of delivery, market separation and demand discrimination


  • Mitraille, Sebastien

    (University of Bristol)

  • Eric Avenel


We show that an adequate choice of delays to deliver a durable good allows a monopoly to reduce competition between his two retailers on two different markets. Instead of preventing each retailer from selling on both markets, the producer separates the markets by directing the choices of consumers between the retailers. The consumer whose willingness to pay is the lowest obtains the good later than the other, and both pay their highest valuations for the good: the producer perfectly discriminates the demand. The European car market where producers try to restrict competition between retailers is an application of our findings.

Suggested Citation

  • Mitraille, Sebastien & Eric Avenel, 2003. "Strategic delays of delivery, market separation and demand discrimination," Royal Economic Society Annual Conference 2003 155, Royal Economic Society.
  • Handle: RePEc:ecj:ac2003:155

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    References listed on IDEAS

    1. Bagnoli, Mark & Salant, Stephen W & Swierzbinski, Joseph E, 1989. "Durable-Goods Monopoly with Discrete Demand," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1459-1478, December.
    2. Avner Shaked & John Sutton, 1982. "Relaxing Price Competition Through Product Differentiation," Review of Economic Studies, Oxford University Press, vol. 49(1), pages 3-13.
    3. Philip J. Reny, 1999. "On the Existence of Pure and Mixed Strategy Nash Equilibria in Discontinuous Games," Econometrica, Econometric Society, vol. 67(5), pages 1029-1056, September.
    4. Anderson, Simon P. & Ginsburgh, Victor A., 1994. "Price discrimination via second-hand markets," European Economic Review, Elsevier, vol. 38(1), pages 23-44, January.
    5. Kuhn, Kai-Uwe, 1998. "Intertemporal Price Discrimination in Frictionless Durable Goods Monopolies," Journal of Industrial Economics, Wiley Blackwell, vol. 46(1), pages 101-114, March.
    6. Jaskold Gabszewicz, J. & Thisse, J. -F., 1979. "Price competition, quality and income disparities," Journal of Economic Theory, Elsevier, vol. 20(3), pages 340-359, June.
    7. Frank Verboven, 1996. "International Price Discrimination in the European Car Market," RAND Journal of Economics, The RAND Corporation, vol. 27(2), pages 240-268, Summer.
    8. Nancy L. Stokey, 1979. "Intertemporal Price Discrimination," The Quarterly Journal of Economics, Oxford University Press, vol. 93(3), pages 355-371.
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    More about this item


    delivery delays; discrimination; market separation; vertical restraints; European car market;

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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