scholarly journals Zone Pricing in Retail Oligopoly

2019 ◽  
Vol 11 (1) ◽  
pp. 124-156 ◽  
Author(s):  
Brian Adams ◽  
Kevin R. Williams
Keyword(s):  
Market Power ◽  
Price Discrimination ◽  
Consumer Surplus ◽  
Welfare Effects ◽  
Rural Markets ◽  
Home Improvement ◽  
Home Depot ◽  
Zone Pricing

We quantify the welfare effects of zone pricing, or setting common prices across distinct markets, in retail oligopoly. Although monopolists can only increase profits by price discriminating, this need not be true when firms face competition. With novel data covering the retail home-improvement industry, we find that Home Depot would benefit from finer pricing but that Lowe’s would prefer coarser pricing. Zone pricing softens competition in markets where firms compete, but it shields consumers from higher prices in rural markets, where firms might otherwise exercise market power. Overall, zone pricing produces higher consumer surplus than finer price discrimination does. (JEL D43, L13, L81, M31, R32)

Consumer surplus bias and the welfare effects of price discrimination

2019 ◽  
Vol 55 (1) ◽  
pp. 33-45
Author(s):  
Francisco Galera ◽  
Pedro Garcia-del-Barrio ◽  
Pedro Mendi
Keyword(s):  
Price Discrimination ◽  
Consumer Surplus ◽  
Welfare Effects

scholarly journals The Welfare Effects of Social Media

2020 ◽  
Vol 110 (3) ◽  
pp. 629-676 ◽  
Author(s):  
Hunt Allcott ◽  
Luca Braghieri ◽  
Sarah Eichmeyer ◽  
Matthew Gentzkow
Keyword(s):  
Social Media ◽  
Consumer Surplus ◽  
Well Being ◽  
Welfare Effects ◽  
Political Polarization ◽  
Subjective Well Being ◽  
Online Activity ◽  
Societal Benefits ◽  
Facebook Use ◽  
Watching Tv

The rise of social media has provoked both optimism about potential societal benefits and concern about harms such as addiction, depression, and political polarization. In a randomized experiment, we find that deactivating Facebook for the four weeks before the 2018 US midterm election (i) reduced online activity, while increasing offline activities such as watching TV alone and socializing with family and friends; (ii) reduced both factual news knowledge and political polarization; (iii) increased subjective well-being; and post-experiment Facebook use. Deactivation reduced post-experiment valuations of Facebook, suggesting that traditional metrics may overstate consumer surplus. (JEL D12, D72, D90, I31, L82, L86, Z13)

Welfare Effects of Price Discrimination by a Regulated Monopolist

1991 ◽  
Vol 22 (4) ◽  
pp. 571 ◽  
Author(s):  
Mark Armstrong ◽  
John Vickers
Keyword(s):  
Price Discrimination ◽  
Welfare Effects

scholarly journals Loss Leading as an Exploitative Practice

2012 ◽  
Vol 102 (7) ◽  
pp. 3462-3482 ◽  
Author(s):  
Zhijun Chen ◽  
Patrick Rey
Keyword(s):  
Social Welfare ◽  
Market Power ◽  
Consumer Surplus ◽  
Complementary Products ◽  
One Stop ◽  
Established Firms

We show that large retailers, competing with smaller stores that carry a narrower range, can exercise market power by pricing below cost some of the products also offered by the smaller rivals, in order to discriminate multistop shoppers from one-stop shoppers. Loss leading thus appears as an exploitative device rather than as an exclusionary instrument, although it hurts the smaller rivals as well; banning below-cost pricing increases consumer surplus, rivals' profits, and social welfare. Our insights extend to industries where established firms compete with entrants offering fewer products. They also apply to complementary products such as platforms and applications. (JEL L11, L13, L81)

scholarly journals Las patentes como límite a la innovación tecnológica

2021 ◽  
pp. 99-130
Author(s):  
Alejandro Pérez ◽  
Soto Domínguez ◽  
Katherine Flórez Pinilla
Keyword(s):  
Economic Theory ◽  
Theoretical Analysis ◽  
Key Words ◽  
Market Power ◽  
Technological Innovation ◽  
Price Discrimination ◽  
Technological Development ◽  
Jel Classification ◽  
Patent Law ◽  
Palabras Clave

This paper analyzes from the Austrian School of Economics inte-llectual property patents, understood as a legislative mechanism to encourage entrepreneurial behavior that will lead to innovation and technological de-velopment. We take the case for patents in the pharmaceutical sector, in which we find empirical evidence corroborating the hypothesis of the school, through a theoretical analysis based on issues identified around the patent, such as price discrimination, research limited to certain pathologies, unlimited market power, barriers to national technological development, high costs of protection by the state. Key words: Action Incentives, Entrepreneurship, Patent Law, Economic Theory and Technological Innovation. JEL Classification: B53, L43, K11, K23. Resumen: El presente artículo tiene por objeto analizar desde el marco de la Escuela Austriaca la propiedad intelectual reflejada en las patentes, entendidas como un mecanismo del legislador para incentivar una conducta empresarial que impulse la innovación y el desarrollo tecnológico. Se tomó como caso las patentes en el sector farmacéutico, obteniendo a partir de éste evidencia empírica y la corroboración de las hipótesis de la escuela, por medio de un análisis teórico a la luz de los problemas identificados al-rededor de la patente, tales como: discriminación de precios, investigación parcializada en ciertas enfermedades, poder de mercado ilimitado, barreras al desarrollo tecnológico nacional, altos costos de protección por parte del Estado. Palabras clave: Incentivos de la Acción, Empresarialidad, Derecho de Paten-tes, Teoría Económica e Innovación Tecnológica. Clasificación JEL: B53, L43, K11, K23.

scholarly journals Competitive Imperfect Price Discrimination and Market Power

2019 ◽  
Author(s):  
Paul Belleflamme ◽  
Wing Man Wynne Lam ◽  
Wouter Vergote
Keyword(s):  
Market Power ◽  
Price Discrimination

scholarly journals Consumer Scores and Price Discrimination

2019 ◽  
Vol 87 (2) ◽  
pp. 750-791 ◽  
Author(s):  
Alessandro Bonatti ◽  
Gonzalo Cisternas
Keyword(s):  
Willingness To Pay ◽  
Price Discrimination ◽  
Consumer Surplus ◽  
Equilibrium Price ◽  
Bayes Rule ◽  
Ratchet Effect ◽  
Disaggregated Data ◽  
Price Discriminate ◽  
Linear Aggregate ◽  
Demand Sensitivity

Abstract We study the implications of aggregating consumers’ purchase histories into scores that proxy for unobserved willingness to pay. A long-lived consumer interacts with a sequence of firms. Each firm relies on the consumer’s current score–a linear aggregate of noisy purchase signals—to learn about her preferences and to set prices. If the consumer is strategic, she reduces her demand to manipulate her score, which reduces the average equilibrium price. Firms in turn prefer scores that overweigh past signals relative to applying Bayes’ rule with disaggregated data, as this mitigates the ratchet effect and maximizes the firms’ ability to price discriminate. Consumers with high average willingness to pay benefit from data collection, because the gains from low average prices dominate the losses from price discrimination. Finally, hidden scores—those only observed by the firms—reduce demand sensitivity, increase average prices, and reduce consumer surplus, sometimes below the naive-consumer level.

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