Price dispersion in duopolies with heterogeneous consumers

Sinitsyn, Maxim

doi:10.1016/j.ijindorg.2008.07.001

Cited by 13 publications

(8 citation statements)

References 31 publications

(24 reference statements)

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“…A few other studies have also used parts of the transaction data which we use in the present article. Hüschelrath and Veith (2011) study pricing patterns during tomer segments where mixed-strategy price equilibria result, see Sinitsyn (2008Sinitsyn ( , 2009, which is in line with the Varian (1980) model of sales.…”

Section: Related Literaturesupporting

confidence: 59%

Competition, Collusion and Spatial Sales Patterns - Theory and Evidence

et al. 2017

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. AbstractWe study competition in markets with significant transport costs and capacity constraints. We compare the cases of price competition and coordination in a theoretical model and find that when firms compete, they more often serve more distant customers that are closer to plants of competitors. By means of a rich micro-level data set of the cement industry in Germany, we provide empirical evidence in support of this result. Controlling for other potentially confounding factors, such as the number of production plants and demand, we find that the transport distances between suppliers and customers were on average significantly lower in cartel years than in non-cartel years.JEL classification: K21, L11, L41, L61

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Section: Related Literaturesupporting

confidence: 59%

Competition, Collusion and Spatial Sales Patterns - Theory and Evidence

et al. 2017

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“…8 Reflecting its interest in price dispersion, this literature focuses on mixed-strategy equilibria with homogeneous goods, akin to those emerging in our setting for low heterogeneity. More closely related to our analysis are Sinitsyn (2008Sinitsyn ( , 2009. These papers introduce heterogeneity among non-captive consumers and characterize the corresponding pricing equilibria.…”

Section: Introductionmentioning

confidence: 99%

“…Their focus lies on the description of the complex mixed-strategy equilibria that emerge for low levels of heterogeneity. In Sinitsyn (2009), firms are symmetric in their captive base. Sinitsyn (2008), like our paper, analyzes an asymmetric setup where only one of two firms has captive consumers.…”

Section: Introductionmentioning

confidence: 99%

Challenging the Incumbent: Entry in Markets with Captive Consumers and Taste Heterogeneity

Oertel

Schmutzler

2021

SSRN Journal

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We analyze entry of a firm with a new and differentiated product into a market with two properties: An existing incumbent has a captive consumer base, and all consumers have heterogeneous tastes. The interaction of the share of captive consumers with the degree of taste heterogeneity leads to non-monotone effects of both parameters on entry. In particular, a higher captive share can support entry when heterogeneity is low but not when it is high, and higher taste heterogeneity (i.e., less product substitutability) can impede entry in the presence of captive consumers. Considering these effects together leads to new insights on entry, horizontal product innovation, and price discrimination.

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“…They also find that the range of price dispersion increases with the number of firms, and that when prices are chosen sequentially the equilibrium pricing pattern is the same. Sinitsyn [ 13 ] presents a model of sales with product differentiation and heterogeneity in consumer preferences and shows that in the mixed strategy equilibrium firms choose the prices from a finite set and do not choose a continuum of prices. Chudik [ 14 ] develops a stock-flow matching model with fully-informed participants and prices that are set ex-ante.…”

Section: Introductionmentioning

confidence: 99%

A Linear City Model with Asymmetric Consumer Distribution

Azar

2015

PLoS ONE

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The article analyzes a linear-city model where the consumer distribution can be asymmetric, which is important because in real markets this distribution is often asymmetric. The model yields equilibrium price differences, even though the firms’ costs are equal and their locations are symmetric (at the two endpoints of the city). The equilibrium price difference is proportional to the transportation cost parameter and does not depend on the good's cost. The firms' markups are also proportional to the transportation cost. The two firms’ prices will be equal in equilibrium if and only if half of the consumers are located to the left of the city’s midpoint, even if other characteristics of the consumer distribution are highly asymmetric. An extension analyzes what happens when the firms have different costs and how the two sources of asymmetry – the consumer distribution and the cost per unit – interact together. The model can be useful as a tool for further development by other researchers interested in applying this simple yet flexible framework for the analysis of various topics.

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Price dispersion in duopolies with heterogeneous consumers

Cited by 13 publications

References 31 publications

Competition, Collusion and Spatial Sales Patterns - Theory and Evidence

Competition, Collusion and Spatial Sales Patterns - Theory and Evidence

Challenging the Incumbent: Entry in Markets with Captive Consumers and Taste Heterogeneity

A Linear City Model with Asymmetric Consumer Distribution

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