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Competition Under Nonlinear Pricing

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  • Ivaldi, M.
  • Martimort, D.

Abstract

Despite its great prevalence in practice, competition through whole schedules of prices as function of quantities remains largely unexplored. To deal with this question, the multiprincipal incentive theory is exploited to build a theoretical model of oligopolistic competition which is fitted to data on the French market of energy distribution. A distinguishing feature of our analysis is that in equilibrium, nonlinear pricing schemes depend on an aggregated statistic of unknown individual valuations for the different goods and on the rivals' contract parameters. The empirical results show that incomplete information plays a crucial role. Since estimates of the structural parameters are obtained, inferences can be drawn on the degree of product differentiation, the effectiveness of regulatory constraint and the levels of suppliers' price margins.
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Suggested Citation

  • Ivaldi, M. & Martimort, D., 1992. "Competition Under Nonlinear Pricing," Papers 93.288, Toulouse - GREMAQ.
  • Handle: RePEc:fth:gremaq:93.288
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    Cited by:

    1. Miravete, Eugenio J, 2001. "Quantity Discounts for Time-Varying Consumers," CEPR Discussion Papers 2699, C.E.P.R. Discussion Papers.
    2. Simon P. Anderson & Régis Renault, 2011. "Price Discrimination," Chapters,in: A Handbook of Transport Economics, chapter 22 Edward Elgar Publishing.
    3. Gary-Bobo, Robert J. & Larribeau, Sophie, 2002. "A Structural Econometric Model of Price Discrimination in the Mortgage Lending Industry," CEPR Discussion Papers 3302, C.E.P.R. Discussion Papers.
    4. Hoernig Steffen & Valletti Tommaso M., 2011. "When Two-Part Tariffs are Not Enough: Mixing with Nonlinear Pricing," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 11(1), pages 1-20, October.
    5. Céline Bonnet & Pierre Dubois, 2010. "Inference on vertical contracts between manufacturers and retailers allowing for nonlinear pricing and resale price maintenance," RAND Journal of Economics, RAND Corporation, vol. 41(1), pages 139-164.
    6. David Martimort & Lars Stole, 2009. "Market participation in delegated and intrinsic common-agency games," RAND Journal of Economics, RAND Corporation, vol. 40(1), pages 78-102.
    7. Khaled Diaw & Jérôme Pouyet, 2005. "Information, competition and (In) complete discrimination," Working Papers hal-00243025, HAL.
    8. Martimort, David & Stole, Lars, 2011. "Public Contracting in Delegated Agency Games," MPRA Paper 32874, University Library of Munich, Germany.
    9. Xiaodong Wu, 2000. ""Pollution Havens" and the Regulation of Multinationals by Multiple Governments," Econometric Society World Congress 2000 Contributed Papers 1766, Econometric Society.
    10. Eugenio J. Miravete, 2002. "Estimating Demand for Local Telephone Service with Asymmetric Information and Optional Calling Plans," Review of Economic Studies, Oxford University Press, vol. 69(4), pages 943-971.
    11. Pierre-André Chiappori & Bernard Salanié, 2002. "Testing Contract Theory : A Survey of Some Recent Work," Working Papers 2002-11, Center for Research in Economics and Statistics.
    12. Jensen, S., 2000. "Price Discrimination and Three Part Tariffs in a Duopoly," Papers 3/2000, Norwegian School of Economics and Business Administration-.
    13. Khaled Diaw & Jérôme Pouyet, 2004. "Competition, Incomplete Discrimination and Versioning," Working Papers 2004-20, Center for Research in Economics and Statistics.
    14. Ivaldi, Marc & Verboven, Frank, 2005. "Quantifying the effects from horizontal mergers in European competition policy," International Journal of Industrial Organization, Elsevier, vol. 23(9-10), pages 669-691, December.
    15. Gary-Bobo, Robert J. & Larribeau, Sophie, 2004. "A structural econometric model of price discrimination in the French mortgage lending industry," International Journal of Industrial Organization, Elsevier, vol. 22(1), pages 101-134, January.
    16. Eugenio J. Miravete, "undated". "Quantity Discounts for Taste-Varying Consumers," Penn CARESS Working Papers e8c875d525675df452b9522a2, Penn Economics Department.
    17. Bousquet, Alain & Ivaldi, Marc, 1997. "Optimal pricing of telephone usage: An econometric implementation," Information Economics and Policy, Elsevier, vol. 9(3), pages 219-239, September.
    18. Lavergne, Pascal & Thomas, A., 1997. "Semiparametric estimation and testing in models of adverse selection, with an aplication to environmental regulation," DES - Working Papers. Statistics and Econometrics. WS 6221, Universidad Carlos III de Madrid. Departamento de Estadística.
    19. Sergei Guriev & Dmitry Kvassov, 2000. "Barter for price discrimination? A theory and evidence from Russia," Working Papers w0007, Center for Economic and Financial Research (CEFIR).
    20. Guriev, Sergei & Kvassov, Dmitri, 2004. "Barter for price discrimination," International Journal of Industrial Organization, Elsevier, vol. 22(3), pages 329-350, March.
    21. Miravete, Eugenio J & Röller, Lars-Hendrik, 2003. "Competitive Non-Linear Pricing in Duopoly Equilibrium: The Early US Cellular Telephone Industry," CEPR Discussion Papers 4069, C.E.P.R. Discussion Papers.
    22. FRANCISCO MARCOS & Juan Santaló, 2007. "Tomb price discrimination in cemeteries: competition in the market for corpses?," Working Papers Economia wp07-09, Instituto de Empresa, Area of Economic Environment.
    23. Stole, Lars A., 2007. "Price Discrimination and Competition," Handbook of Industrial Organization, Elsevier.

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    Keywords

    competition ; pricing;

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