National pricing with local quality competition

Abstract

We study the incentives of national retail chains to adopt national (uniform) prices across local markets that di¤er in size and competition intensity. In addition to price, the chains may also compete along a quality dimension, and quality is always set locally. We show that absent quality competition, the chains will never use national pricing. However, if quality competition is su¢ ciently strong there exist equilibria where at least one of the chains adopts national pricing. We also identify cases in which national pricing bene…ts (harms) all consumers, even in markets where such a pricing strategy leads to higher (lower) prices.

Behavior-Based Price Discrimination with a General Demand

“…In the era of the Internet of Things, Algorithms, Arti…cial Intelligence, and limitless cloud storage, data collection for price discrimination is virtually in…nite. Reports from the OECD and the European Commission on price discrimination in the digital economy (OECD, 2016, 2018a,b and EC, 2018a,b, 2022 identify the growing availability and accessibility of Big Data and Big Analytics as the main factors underlying the increasing use of new forms of price discrimination, such as personalized pricing and behavior-based price discrimination (henceforth, BBPD). This latter form of price discrimination was introduced in the economics literature by Fudenberg and Tirole (2000).…”