| Abstract: |
This thesis consists of three independent chapters: In the first chapter, we
consider a Hotelling model of price competition where firms may acquire
information regarding the preferences (i.e. “location”) of customers. By
purchasing additional information, a firm has a finer partition regarding
customer preferences, and its pricing decisions must be measurable with
respect to this partition. If information acquisition decisions are common
knowledge at the point where firms compete via prices, we show that a pure
strategy subgame perfect equilibrium exists, and that there is “excess
information acquisition” from the point of view of the firms. If information
acquisition decisions are private information, a pure strategy equilibrium
fails to exist. We compute a mixed strategy equilibrium for a range of
parameter values. The second chapter investigates a case of national versus
regional pricing. Competition authorities frequently view price discrimination
by firms as detrimental to consumers. In the case of the UK supermarket
industry they suggested a move to uniform pricing. Yet theoretical predictions
are ambiguous about whether third degree price discrimination is beneficial or
detrimental to consumers, and in general there will be some consumers who
benefit while other lose out. In this chapter, we estimate the impact that the
move from regional to uniform pricing had on Tesco’s profits and consumer's
surplus. We estimate an AIDS model of consumer expenditure in the eggs market
in a multi-stage budgeting framework allowing for very flexible substitution
patterns between products at the bottom level. We use data on farm gate prices
to instrument price in the demand equation. Our results suggest that switching
to a regional pricing policy can potentially increase Tesco’s profit on eggs
by 37%. However, while there are winners and losers, the overall effect on
consumer welfare is not significant. In the third chapter, we study the kidney
market in Iran. The most effective treatment for end-stage renal disease is a
kidney transplant. While the supply of cadaveric kidneys is limited, the
debate has been focused on the effects of the existence of a free market for
human organs. Economists as well as medical and legal researchers are divided
over the issue. Iran has a unique kidney market which has been in place for
over 20 years, frequently reporting surprising success in reducing the waiting
list for kidneys. This paper demonstrates how the Iranian system works and
estimates the welfare effect of this system. |