Fighting Bundles: The Effects of Competition on Second-Degree Price Discrimination

2020 ◽  
Vol 12 (1) ◽  
pp. 156-187
Author(s):  
Andre Boik ◽  
Hidenori Takahashi
Keyword(s):  
Market Structure ◽  
Price Discrimination ◽  
High Quality ◽  
Second Degree

We study how changes in market structure affect how firms engage in second-degree price discrimination. Specifically, we study how a large incumbent cable firm changes its menu of price-quality offerings and mixed bundles in response to entry. Competition strongly decreases the rate at which prices increase in quality and induces the incumbent to introduce additional medium- to high-quality offerings that the incumbent could have introduced absent competition but chose not to. Our findings are relevant for the broadband industry because they suggest that competition can improve broadband quality through direct pricing effects without any changes in investment in maximum quality. (JEL D21, D22, D43, L13, L42, L82)

Product Lines and Price Discrimination in Markets with Information Frictions

2021 ◽  
Author(s):  
Natalia Fabra ◽  
Juan-Pablo Montero
Keyword(s):  
Price Discrimination ◽  
Competition Model ◽  
Information Frictions ◽  
Product Lines ◽  
High Quality ◽  
The Cost ◽  
Duopolistic Competition ◽  
Second Degree

A well-known principle in economics is that firms differentiate their product offerings in order to relax competition. However, in this paper we show that information frictions can invalidate this principle. We build a duopolistic competition model of second-degree price discrimination with information frictions in which (i) an equilibrium always exists with overlapping product qualities, whereas (ii) an equilibrium with nonoverlapping product qualities exists only if both information frictions and the cost of providing high quality are sufficiently small. As a consequence, reasons other than an attempt to soften competition should explain why firms in some cases carry nonoverlapping product lines. This paper was accepted by Matthew Shum, marketing.

scholarly journals PERSPEKTIF ILMU EKONOMI DAN UNDANG-UNDANG NOMOR 5 TAHUN 1999 TENTANG LARANGAN PRAKTIK MONOPOLI DAN PERSAINGAN USAHA TIDAK SEHAT TERHADAP DISKRIMINASI HARGA

2018 ◽  
Author(s):  
Irwan Sugiarto
Keyword(s):  
Price Discrimination ◽  
Peak Load ◽  
Cost Price ◽  
Price Strategy ◽  
Price Determination ◽  
Intertemporal Price Discrimination ◽  
Price Strategies ◽  
Second Degree

Unfair business competition can cause and trigger monopoly practice where markets arecontrolled and dominated by business doers. Besides, another impact of monopoly practiceis that; the business doers tend to sell expensive products without good quality. Monopolybusiness doers often apply price strategy where the entrepeneurs at normal competitivemarkets are not possible to do that. One of price strategies is price discrimination. Pricediscrimination refers to different price determination at a product at different time to everydifferent customer, or different market, but it is not based on different cost. Price discriminationcan be distinguished into three kinds, namely first degree price discrimination, second degreeprice discrimination, and third degree price discrimination. In addition to that, there is avariant in second degree price discrimination and third degree price discrimination, namelytwo part tariff, intertemporal price discrimination, and also peak load pricing.In Act No. 5 year 1999, discrimination related to prices is regulated in two groups ofrules and articles, that is to say price discrimination which is aproved under agreement, anddiscrimination which is performed by unilateral agreement or without agreement.

scholarly journals Market Structure, Reputation, and the Value of Quality Certification

2015 ◽  
Vol 7 (4) ◽  
pp. 83-108 ◽  
Author(s):  
Daniel W. Elfenbein ◽  
Raymond Fisman ◽  
Brian McManus
Keyword(s):  
Market Structure ◽  
Product Space ◽  
Past Performance ◽  
High Quality ◽  
Positive Effects ◽  
On Demand ◽  
Certification Programs ◽  
Online Marketplace ◽  
Quality Certification ◽  
Using Data

Quality certification programs help consumers identify high-quality products or sellers in markets with information asymmetries. Using data from eBay UK's online marketplace, we study how certification's impact on demand varies with market- and seller-level attributes, exploiting variation in sellers' certification status within groups of near-identical listings. The positive effects of eBay's “top rated seller” certification are stronger for categories with few other certified sellers, in more competitive markets, and for sellers with shorter records of past performance. These findings indicate certification provides more value when certification is rare, the product space is crowded, and for sellers lacking established reputations. (JEL D12, D82, L15, L86)

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