Price Discrimination in Asymmetric Industries: Implications for Competition and Welfare

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractPrice discrimination by consumer's purchase history is widely used in regulated industries, such as communication or utilities, both by incumbents and entrants. I show that such discrimination can have surprisingly negative welfare effects -even though prices and industry profits fall, so does consumer surplus. Earlier studies that did not allow entrants to discriminate or assumed symmetric firms yielded sharply different results, the pro-competitive effect of price discrimination are stronger in these settings. Imposing a pricing constraint on incumbent's discrimination leads the entrant to discriminate more heavily, but still improves both consumer and producer welfare.

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“…18 Finally, we assume that c 0 (1) is arbitrarily large to rule out equilibria with full coverage -i.e., it will never be optimal for a seller to cover the entire market. 19 Timing. The timing of the game is as follows:…”

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“…However, when we introduce the share inequality index, this has a negative and statistically significant impact: given the number of banks, dispersed held debt increases the probability of debt restructuring, while concentrated debt tends to reduce it. 19 This result can be explained by the possible mutual control mechanism among banks having similar lending shares, which reduces free riding incentives in the 18 Similar results are reached using dummies for the number of banks, with a maximum at around three banks. 19 An interaction term between the number of banks and the concentration index is never significant.…”

“…19 This result can be explained by the possible mutual control mechanism among banks having similar lending shares, which reduces free riding incentives in the 18 Similar results are reached using dummies for the number of banks, with a maximum at around three banks. 19 An interaction term between the number of banks and the concentration index is never significant. Collateral -defined as the value of real guarantees (mainly real estate) pledged to the bank over the value of outstanding loans -is never significant in our specifications.…”