Competition, access pricing and regulation in a second degree price discrimination setting

by Maria Vagliasindi

Publisher: typescript in [s.l.]

Written in English
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Thesis (Ph.D.) - University of Warwick, 1995.

StatementMaria Vagliasindi.
ID Numbers
Open LibraryOL16528917M

The Limits of Price Discrimination by Dirk Bergemann, Benjamin Brooks and Stephen Morris. Published in volume , issue 3, pages of American Economic Review, March , Abstract: We analyze the welfare consequences of a monopolist having additional . Second degree. Price varies according to demand: larger quantities are available at a lower unit price. Fourth degree/reverse price discrimination. Prices are the same for different customers, even if organizational costs may vary. adhere to a price book or list price, engage in cooperative price advertising, standardize financial. Price Discrimination. There are more possibilities for a monopolist to take advantage of his/her situation: She can charge different prices from different customers. This is called price discrimination, and we distinguish between price discrimination of the first, second, and third degrees. First Degree Price Discrimination.   Travis Roach, Market Power and Second Degree Price Discrimination in Retail Gasoline Markets, Energy Economics, /, (), (). Crossref Aurelio G. Mauri, Ruggero Sainaghi, Giampaolo Viglia, The Use of Differential Pricing in Tourism and Hospitality, Strategic Perspectives in Destination Marketing, /

The price I'm going to be able to sell it, so this is the quantity that I'm going to be able to sell, the price that I'm going to sell it at, go up to the demand curve, that point of the demand curve and it looks like I'll be able to sell it for about, I don't know, $33 a bottle. – second-degree or menu pricing – third-degree or group pricing. 5 Third-degree price discrimination • Consumers differ by some observable characteristic(s) • A uniform price is charged to all consumers in a Third-degree price discrimination 2 • The pricing rule is very simple. Price discrimination by manufacturers is a recurring theme in antitrust cases. For instance, in February , the federal district court in Beaumont, Texas discussed the claim of Games People Play (GPP), a major retailer for golf equipment in the US, against Nike. It is shown that offering fixed-fee pricing in addition to a nonlinear usage-based pricing scheme is always profit improving in the presence of nonzero transaction costs, and there may be markets in which a pure fixed-fee is optimal. This implies that the optimal pricing strategy for information goods is almost never fully revealing.

differ in the importance of price and product attributes. In particular, we investigate second-degree price discrimination under competition with explicit incentive compatibility constraints thus extending prior work in marketing and economics. Focusing on the managerial implications, we explore whether it would. Canada is subject to a patchwork of laws and policies relating to the pricing and reimbursement of drug products. The price of Canadian drugs through the supply chain from manufacturer to wholesaler to pharmacy, and at the retail level, is subject to complex regulations under both federal and . Second-degree price discrimination can be illustrated using the accompanying diagram. The demand curve displayed here is that facing Feet-First Pharmaceutical, a well-known monopolist that controls the market for Amblathan-Plus, the only cure for the deadly (but hypothetical) foot ailment known as amblathanitis.. On the surface, this appears to be a normal, run-of-the-mill, negatively sloped. Abstract. The Russian economy relies on the Russian freight railways to an extraordinary degree. In , after years of debate, the Russian government adopted an ambitious plan to transform this vertically integrated, government owned monopoly into a system that would rely more on private investment and competition and less on government ownership and regulation.

Competition, access pricing and regulation in a second degree price discrimination setting by Maria Vagliasindi Download PDF EPUB FB2

PRICE DISCRIMINATION, COMPETITION AND REGULATION (The setting of these papers is one of second-degree rather than third-degree price discrimination.) Unless the rival is sufficiently more cost-efficient than the incumbent, 'cream-skimming' of high-demand customers on the part of.

Price Discrimination and Competition • Second-degree price-discrimination (I.e., two-part or non-linear prices) – Access prices should have a two-part or non-linear structure –Examples – But what if two-part pricing is possible in final prices but not in access prices.

• Downstream competition is limited. Charging different prices for different ranges or blocks of output from your company results in second-degree price discrimination or declining block pricing. Typically, consumers pay one price for the first, small block of output, and lower prices for additional ranges or blocks of output.

Electric companies frequently use this type of price discrimination. For example, [ ]. Second-degree price discrimination uses this insight in that it charges different prices for different number of units that a consumer buys. Examples of second-degree price discrimination include quantity discounts, when more units are sold at a lower per-unit price; and block-pricing, when the consumer pays different price for different blocks.

Second-Degree Price Discrimination: Versioning. As noted by Varian and Shapiro inthe idea behind versioning To engage in differential pricing by offering different versions of a product.

is to engage in differential pricing by offering different versions of a product. Figure "Second-Degree Price Discrimination" illustrates the versioning concept. 9A considerable amount of study has also focused on how product lines should be chosen to soften second-stage price competition.

While the present survey considers the effect of product line choice in segmenting the marketplace (e.g. second-degree price discrimination), it is silent about the strategic effects of locking.

The Robinson-Patman Act was passed into prevent “unfair” competition caused by price discrimination. It is an amendment of the Clayton Antitrust Act ofand lays down the conditions in which comparable prices can be charged.

Price discrimination can be referred to as ‘charging different prices for the same goods or services’. First-Degree Price Discrimination. In an ideal business world, companies would be able to eliminate all consumer surplus through first-degree price discrimination.

This type of pricing strategy. Second-degree price discrimination Students often get discounts on the purchase of laptops. Third-degree price discrimination Upper A bookstore has an offer of buy two get one free.

Second-degree price discrimination. The necessary harm to competition at the buyer level can be inferred from the existence of significant price discrimination over time. Courts may be starting to limit this inference to situations in which either the buyer or the seller has market power, on the theory that, for example, lasting competitive harm is unlikely if alternative sources.

The variations in package size and corresponding price revealed Dominick’s second-degree price discrimination strategy, with price per tablet decreasing dramatically as packages got larger.

For example, the total price of four tablet packages of Bayer was over twice as much as a single package of tablets. Price discrimination is common in many different types of markets, whether online or offline, and even among firms with no market power; it usually reflects the competitive behaviour that competition policy seeks to promote (either by incentivising firms to serve more consumers, or by increasing the incentive to compete) and hence has no anti-competitive purpose or effect.

first-degree price discrimination by trying to charge an entry fee and a per unit price. imperfect price discrimination by trying to determine each customer's reservation price.

second-degree price discrimination by trying to determine each customer's marginal value. predatory price discrimination by trying to charge different prices.

Second-degree price discrimination, or nonlinear pricing, involves setting prices subject to the amount bought, in an attempt to capture part of the consumer es collected by the firm in this matter will be a nonlinear function.

observed in practice as first degree price discrimination assumes that the firm has perfect knowledge of its customers’ willingness to pay, an assumption which is unlikely to be met in most markets.6 - Second degree price discrimination occurs when a firm sets a price per unit which varies with the number of units the customer buys.

SECOND-DEGREE PRICE DISCRIMINATION FIRST Degree: The firm knows that it faces different individuals with different demand functions and furthermore the firm can tell who is who.

In this case the firm extracts all the consumer surplus, usually with a two-part tariff (with P = MC, thus the same price for everybody, but with different tariffs for.

These are examples of price discrimination. In a monopoly, the seller adopts this method of pricing to earn abnormal profits. It is important to remember that price discrimination cannot persist under perfect competition since the seller has no control over the market price of the product/service.

The second type of price discrimination is second-degree price discrimination, where different prices are charged based on the quantity of the goods purchased. With this type of discrimination.

What is Second Degree Price Discrimination. This involves businesses selling off packages or blocks of a product deemed to be surplus capacity at lower prices than the previously published or advertised price.; Price tends to fall as the quantity bought increases.

Examples of this can be found in the hotel industry where spare rooms are sold on a last minute standby basis. • The firm then must choose the type of price discrimination – first-degree or personalized pricing – second-degree or menu pricing – third-degree or group pricing Chapter 5: Price Discrimination: Linear Pricing 4 Third-degree price discrimination • Consumers differ.

Then there is “second-degree price discrimination,” by which retailers offer tiered prices based on product quantity or quality (where premium options are priced far above cost)—e.g. Second-degree price discrimination is also known as block rate setting.


89 OF ) AND THE COMPETITION AMENDMENT BILL, [B 23B] Background In my address to the National Assembly at the Second Reading Debate on the. Price discrimination is the practice of charging prices for the same or similar product or service to different consumers.

The price differences do not reflect the differences in cost of supply There are three types of Price Discrimination First Degree: This involves charging consumers the maximum price that they are willing to pay.

There will. Offering multiple ticket prices may raise profits even if all consumers are identical. This is not the case in the standard model of second-degree price discrimination à la Mussa and Rosen (). As mentioned above, artists do not fully exploit the opportunities offered by second-degree price discrimination.

1.) First degree price discrimination: here the monopolist charge different price according to the paying capacity of the example the charging less fees from poor students. 2.) Second degree price discrimination: in such a situation the monopolist charge different price for different units of the same product.

For example the government charge different price for different units. In “second-degree” price discrimination, the seller does not know how much buyers are able and willing to pay, but induces them to reveal their resources or preferences through their purchasing decisions.

Thomadsen, and Taragin (). Another focuses on the impact of competition on price menus in settings in which firms practice second-degree price discrimination; see Busse and Rysman () and Seim and Viard (). The third and largest set of studies considers the impact of competition on price differences or price disper.

Fighting Bundles: The Effects of Competition on Second-Degree Price Discrimination pp. Andre Boik and Hidenori Takahashi Searching for Service pp. Maarten C. Janssen and T. Tony Ke Credibility of Crime Allegations pp. Frances Xu Lee and Wing Suen Experimenting with Career Concerns pp.

Marina Halac and Ilan Kremer. Price discrimination requires: Different price elasticities of demand in each sub-market (e.g. OAP vs. business traveller) No market seepage (i.e. reselling between sub-markets is impossible) Firms are price-makers (i.e.

operate in an imperfectly competitive market) There are three types of price discrimination: First Degree Price Discrimination. third-degree price discrimination on multi-sided platforms. This approach builds on traditional price discrimination models for price discrimination in multi-market con-sumer population by taking into account the externalities among them.

Second, we implement this model using data we collected on Facebook, introducing a novel method.THE MODEL WITHOUT REGULATION.

We deliberately adopt a very simple framework to analyze the issues at hand. @ Basil Blackwell Ltd. In particular, it is a setting where, in the absence of competition, the incumbent monopolist would not choose to engage in price discrimination even if allowed to do so.PRICEDISCRIMINATION thanone?

Atanypricewheretheelasticityislessthanone,apriceincreaseis ndiseverywhereinelastic,thefirmalwayswantsahigherprice.