Essays in industrial economics
This dissertation consists of three chapters in Industrial Economics. Chapter 1 is the product of joint work with Filippo Balestrieri. In chapter 1 we examine the use of lotteries among horizontal differentiated goods as a mechanism to price discriminate consumers. We use the linear city model to represent a market with two differentiated goods. We show that the optimal selling strategy for a multi product monopolist implies offering at least one lottery with probability 1/2. This result is in stark contrast with the the optimal selling strategy of a single product monopolist that attempts to price discriminate consumers based on the probability of delivering the good. Riley and Zeckhauser (1983) show that the single good monopolist does not offer lotteries. We then examine the use of lotteries among the differentiated goods in the case of a market with two competing firms, each one producing one good. We define two different cases depending on whether the market is fully covered. We call fully covered market the case in which the equilibrium prices of the two firms are such that all consumers buy one good. We show that if the market is fully covered, no lotteries are offered in equilibrium. However, when the market is not fully covered the optimal selling strategy may include offering lotteries. With more than two firms selling differentiated goods, even in a fully covered market, lotteries can be used in equilibrium. In this case, firms might be worse off than in the case where no lotteries are provided. Chapter 2 examines firms optimal pricing policy when they sell a storable good of repeated consumption to time-inconsistent consumers. Consumers with time-inconsistent preferences might struggle to make optimal consumption decisions over time. Sophisticate consumers, aware of their time-inconsistent preferences, often try to limit their consumption of certain goods by strategically rationing the quantities they purchase.
Year of publication: |
2008
|
---|---|
Other Persons: | Glenn Ellison and Abhijit Banerjee. (contributor) |
Institutions: | Leao, Joao, Ph. D. Massachusetts Institute of Technology ; Massachusetts Institute of Technology. Dept. of Economics. (contributor) |
Publisher: |
Massachusetts Institute of Technology |
Saved in:
freely available
Saved in favorites
Similar items by person
-
Essays on international finance and economics
Rappoport, Veronica E., (2005)
-
Weinstein, Jonathan, (2005)
-
D'Urso, Victoria Tanusheva, (2002)
- More ...