This paper studies static rational inattention problems with multiple actions and multiple shocks. We solve for the optimal signals chosen by agents and provide tools to interpret information processing. By relaxing restrictive assumptions previously used to gain tractability, we allow agents...

We examine tippy network markets that accommodate price discrimination. The analysis shows that when a mild equilibrium refinement, the monotonicity criterion, is adopted, network competition may have a unique subgame-perfect equilibrium regarding the winner's identity; the prevailing brand may...

This article provides a tractable model of inter-temporal price-discrimination by heterogeneous firms, imperative for our understanding of advance purchase markets in the wake of entry. The pricing schedule of a more efficient entrant is found to differ systematically from the pricing schedule...

This paper studies regulatory policy interventions aimed at protecting sticky consumers who are exposed to exploitation. We model heterogeneous consumer switching costs alongside asymmetric market shares. This setting encompasses many markets in which established firms are challenged by new...

Platforms often use fee discrimination within their marketplace (e.g., Amazon, eBay, and Uber specify a variety of merchant fees). To better understand the impact of marketplace fee discrimination, we develop a model that allows us to determine equilibrium fee and category decisions that depend...

The unprecedented access of firms to consumer level data facilitates more precisely targeted individual pricing. We study the incentives of a data broker to sell data about a segment of the market to three competing firms. The segment only includes a share of the consumers in the market around...

This article studies the effects of consumer information on the intensity of competition. In a two dimensional duopoly model of horizontal product differentiation, firms use consumer information to price discriminate. I contrast a full privacy and a no privacy benchmark with intermediate regimes...

We investigate the strategies of a data intermediary selling consumer information to firms for price discrimination purpose. We analyze how the mechanism through which the data intermediary sells information influences how much consumer information she will collect and sell to firms, and how...

We empirically test the hypothesis that the discounts offered by firms to consumers who purchase tickets in advance increase with the intensity of competition. We develop a new measure of competition for which we use the proximity (in departure time) of a given flight to its competitors to infer...

We analyze the effect of different pricing schemes on horizontally differentiated firms' ability to sustain collusion when customers have the possibility to combine (or mix) products to achieve a better match of their preferences. To this end, we compare two-part tariffs with linear prices and...

This paper studies static rational inattention problems with multiple actions and multiple shocks. We solve for the optimal signals chosen by agents and provide tools to interpret information processing. By relaxing restrictive assumptions previously used to gain tractability, we allow agents...

We analyze the effect of different pricing schemes on horizontally differentiated firms' ability to sustain collusion when customers have the possibility to combine (or mix) products to achieve a better match of their preferences. To this end, we compare two-part tariffs with linear prices and...

Firms selling multiple products usually adopt bundle pricing in their marketing strategy for the purpose of extracting large consumer surplus. In this paper, we propose and analyze a bundling mechanism, referred to as component pricing with a bundle size discount (CPBSD), which sells bundles for...

We examine taste-based and statistical discrimination in an online market. Our approach investigates the unique setting of baseball cards to detect consumer tastes for discrimination based on the race of the player on the card. Our data set allows us to track the transaction history of each...

Third-degree online price discrimination can be welfare-improving when the online-offline cross-demand parameter is large, even though the total outputs are unchanged. However, if the online firm competes with a uniform-pricing chain-store, online discrimination is welfare-worsening. Extensive...

This study analyzes a monopolistic seller’s optimal differential pricing problem with strategic consumers connected in social networks. The consumers who purchase in the later period can get positive externality from their friends who purchased in the early period but have to bear a utility...

We analyze the welfare effects of price discrimination by a monopolistic platform that mediates between two sides of a market. Discrimination is based on asymmetric costs on one side of the market and may be allowed on either or both sides. We show that unconstrained discrimination on both sides...

This paper provides the first evidence for discriminatory behaviour against female consumers in the annuity market. It focuses on Chile, where an electronic bidding system allows retirees to receive offers, simultaneously, from several firms in the market for the same standardised annuity...

This paper assesses the profit and welfare effects of firms' ability to charge personalized prices in markets where consumer demand is sensitive to price changes. In a mill pricing model, regardless of demand elasticity, personalized pricing (PP) raises consumer surplus at the expense of...

Firms in many industries may obtain superior knowledge of customer preferences, whereas customers often need costly efforts to learn their match values. In this pa-per, we examine the optimal pricing strategies for a firm with superior knowledge, when customers can reduce information asymmetry...

Perfect, or the first-degree, price discrimination is a practice to charge a customer different price on every unit of the same product. So the first unit carries the highest price, the second lower, etc. Varian (1993, p.421) used an example, “a small-town doctor who charges his patients...

The third-degree price discrimination theory charges a lower price to a more elastic demand. This paper unveils an unpleasant result of such theory: the lower price comes with less quantity. This paper further reveals the true meaning of elasticity pricing

An incumbent supplier can use exclusive dealing contracts with buyers to prevent entry of an efficient rival when those contracts include an agreement over price. The linear price in the unique exclusionary equilibrium is above (below) the incumbent’s variable cost when buyers compete over...

An imperfectly-informed regulator needs to procure multiple units of some good (e.g., green energy, market liquidity, pollution reduction, land conservation) that can be produced with heterogeneous technologies at various costs. How should she optimally procure these units? Should she run...

We examine tippy network markets that accommodate price discrimination. The analysis shows that when a mild equilibrium refinement, the monotonicity criterion, is adopted, network competition may have a unique subgame-perfect equilibrium regarding the winner’s identity; the prevailing brand...

This study investigates mixed markets in which a social welfare-maximizing public firm and a private firm engage in behavior-based price discrimination (BBPD). Total of two cases are considered: one where domestic shareholders completely own the private firm and one where foreign shareholders...

We explore theoretically and empirically the within-route price discrimination in liner shipping and condition it on the market density. Using transaction-level data from over 200 Chilean import port-to-port routes, we confirm our theoretical predictions and demonstrate their robustness and...

Similar to the perfect one, second-degree price discrimination charges different price for different quantity. Unlike the perfect one, this time the discount is massive, and the quantity difference even so. An obvious explanation is that the customer is a wholesaler, who has a larger demand...

We consider a model where for-profit providers compete in quality in a price-regulated market that has been opened to competition, and where the incumbent is located at the center of the market, facing high costs of relocation. The model is relevant in markets such as public health care,...

Whether input suppliers charge customized (discriminatory) or industry-wide (uniform) prices affects downstream manufacturers' incentives to innovate. This paper investigates the implications of input price discrimination when an upstream monopolist commits to prices before downstream firms make...