Package size and price discrimination in the paper towel market

Cohen, Andrew

doi:10.1016/j.ijindorg.2006.01.004

Cited by 76 publications

(52 citation statements)

References 31 publications

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“…As authors including Moorthy (1984) and Johnson and Myatt (2003) have noted, there exists a duality between some forms of second-degree price discrimination and product-line expansion. For example, the decision of how many package sizes to offer can be viewed as either a product line decision or as a price discrimination decision if the purpose of offering the different sizes is to extract consumer willingness-to-pay (Cohen 2008). However, Draganska and Jain (2006) demonstrate that not all product-line expansions constitute price discrimination.…”

Section: Mailing Listsmentioning

confidence: 99%

Competition and price discrimination in the market for mailing lists

2009

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This paper examines whether mailing list sellers, when faced with additional competitors, are more likely to try to segment consumers by offering additional choices at different prices (second-degree price discrimination) and/or offering different prices to readily identifiable groups of consumers (third-degree price discrimination). We utilize a dataset that includes information about all consumer response lists derived from mail order buyers (i.e. lists derived from catalogs) available for rental in 1997 and 2002. Our results indicate that increased competition leads to an increased propensity to price discriminate along each of the dimensions we investigate. These results hold for both second-degree and third-degree price discrimination. Further, list owners offer menus with more choices in more competitive markets. These

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Section: Mailing Listsmentioning

confidence: 99%

Competition and price discrimination in the market for mailing lists

2009

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“…For example, Leslie (2004) estimates the welfare e¤ects of price discrimination at a Broadway theatre; Cohen (2008) demonstrates that 35-45% of the unit price variation in paper towels is consistent with price discrimination; and several papers show how increases in competition can i) increase the number of pricing options o¤ered by …rms (Borzekowski et However, by concentrating on empirical regularities at the market level, the literature has paid little attention to the potential asymmetries between …rms'pricing strategies. These asymmetries form the main focus of our paper.…”

Section: Introductionmentioning

confidence: 99%

Nonlinear Pricing and Tariff Differentiation: Evidence from the British Electricity Market

Davies¹,

Price²,

Wilson³

2014

The Energy Journal

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Liberalisation of the British household electricity market, in which previously monopolised regional markets were exposed to large-scale entry, is used as a natural experiment on oligopolistic nonlinear pricing. Each oligopolist offered a single two-part electricity tariff, but inconsistent with current theory, the two-part tariffs were heterogeneous in ways that cannot be attributed to explanations such as asymmetric costs or variations in brand loyalty. Instead, the evidence suggests that firms deliberately differentiated their tariff structures, resulting in market segmentation according to consumers’ usage.

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“…Up to now, several papers have empirically analyzed nonlinear pricing using discrete choice models while considering exogenous price schedules. See, e.g., Leslie (2004) for broadway theatre tickets, McManus (2007) for speciality coffee, and Cohen (2008) for paper towel, Mostly related to our paper, Miravete (2002), Miravete and Röller (2004), Economides, Seim, and Viard (2008) and Seim and Viard (2010) study nonlinear pricing in local telephone service and mobile service industry. We propose to use a continuous framework when the large number of varieties stemming from product customization makes discrete choice models intractable.…”

Section: Introductionmentioning

confidence: 94%

Nonlinear Pricing with Product Customization in Mobile Service Industry

Luo

2011

SSRN Journal

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This paper proposes to incorporate product customization in the Maskin and Riley (1984) nonlinear pricing model in order to capture major features of mobile service data. In particular, consumers are characterized by a two-dimensional type. One dimension is observed by the provider and integrates product customization, while the other is a standard parameter of adverse selection, which is unobserved by the provider and makes it necessary for the provider to discriminate among consumers with different tastes through nonlinear pricing. We then propose a novel method to aggregate the multiple-dimensional voice consumption into one-dimensional index. We show that the model structure is identified under the following conditions: The marginal utility function is multiplicatively separable in consumers' tastes, and consumers' observed and unobserved heterogeneity are independent. Empirical results show that both dimensions of heterogeneity are important. Due to asymmetric information, 50% of the "second-best" social welfare is left "on the table" in order to screen heterogeneous consumers. Moreover, if costly product customization does not affect subscribers' utility, 20% of subscribers would not be served.

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Package size and price discrimination in the paper towel market

Cited by 76 publications

References 31 publications

Competition and price discrimination in the market for mailing lists

Competition and price discrimination in the market for mailing lists

Nonlinear Pricing and Tariff Differentiation: Evidence from the British Electricity Market

Nonlinear Pricing with Product Customization in Mobile Service Industry

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