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on Marketing |
| By: | Rhodes, Andrew; Zhou, Jidong |
| Abstract: | A puzzling feature of many retail markets is the coexistence of large multiproduct firms and smaller firms with narrow product ranges. This paper provides a possible explanation for this puzzle, by studying how consumer search frictions influence the structure of retail markets. In our model single-product firms which supply different products can merge to form a multiproduct firm. Consumers wish to buy multiple products, and due to search frictions value the one-stop shopping convenience associated with a multiproduct firm. We find that when search frictions are relatively large all ?rms are multiproduct in equilibrium. However when search frictions are smaller the equilibrium market structure is asymmetric, with di¤erent retail formats coexisting. This allows firms to better segment the market, and as such typically leads to the weakest price competition. When search frictions are low this asymmetric market structure is also the worst for consumers. Moreover due to the endogeneity of market structure, a reduction in the search friction can increase market prices and harm consumers. |
| Keywords: | consumer search; multiproduct pricing; one-stop shopping; retail market structure; conglomerate merger |
| JEL: | D11 D43 D83 L13 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:32715&r=mkt |
| By: | Bimpikis, Kostas (Stanford University); Candogan, Ozan (University of Chicago); Saban, Daniela (Stanford University) |
| Abstract: | We explore spatial price discrimination in the context of a ride-sharing platform that serves a network of locations. Riders are heterogeneous in terms of their destination preferences and their willingness to pay for receiving service. Drivers decide whether, when, and where to provide service so as to maximize their expected earnings, given the platform's prices. Our findings highlight the impact of the demand pattern on the platform's prices, profits, and the induced consumer surplus. In particular, we establish that profits and consumer surplus are maximized when the demand pattern is "balanced" across the network*s locations. In addition, we show that they both increase monotonically with the balancedness of the demand pattern (as formalized by its structural properties). Furthermore, if the demand pattern is not balanced, the platform can benefit substantially from pricing rides differently depending on the location they originate from. Finally, we consider a number of alternative pricing and compensation schemes that are commonly used in practice and explore their performance for the platform. |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:repec:ecl:stabus:3482&r=mkt |
| By: | David Bounie (Télécom ParisTech); Antoine Dubus (Télécom ParisTech); Patrick Waelbroeck (Ecole Nationale Supérieure des Télécommunications de Bretagne) |
| Abstract: | This paper investigates the strategies of a data broker in selling information to one or to two competing firms that can price-discriminate consumers. The data broker can strategically choose any segment of the consumer demand (information structure) to sell to firms that implement third-degree price-discrimination. We show that the equilibrium profits of the data broker are maximized when (1) information identifies the consumers with the highest willingness to pay; (2) consumers with a low willingness to pay remain unidentified; (3) the data broker sells two symmetrical information structures. The data broker therefore strategically sells partial information on consumers in order to soften competition between firms. Extending the baseline model, we prove that these results hold under first-degree price-discrimination. |
| Keywords: | Data broker,Information Structure,Price-discrimination |
| Date: | 2018–05–17 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01794886&r=mkt |
| By: | James D. Dana Jr. (Northwestern University); Kevin R. Williams (Cowles Foundation, Yale University) |
| Abstract: | Inventory controls, used most notably by airlines, are sales limits assigned to individual prices. While typically viewed as a tool to manage demand uncertainty, we argue that inventory controls also facilitate intertemporal price discrimination. In our model, competing ?rms ?rst choose quantity and then choose prices in a series of advance-purchase markets. When demand becomes more inelastic over time, as in the airline and hotel markets, a monopolist can easily price discriminate; however, we show that oligopoly ?rms generally cannot. Inventory controls let ?rms set increasing prices regardless of whether or not demand is uncertain. |
| Keywords: | Capacity-pricing games, Intertemporal price discrimination, Oligopoly models, Inventory controls |
| JEL: | D21 D43 L13 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:2136&r=mkt |