We revisit the effects of switching costs on dynamic competition. We consider stationary Markovian strategies, with market shares being the state variable, and characterize a relatively simple Markov Perfect pricing equilibrium at which there is switching by some consumers at all times. For the...

In a general equilibrium model with at least three goods, a perfectly price-discriminating monopoly (PDM) selects an inefficient production plan even if consumers are homogenous, their preferences are representable by quasi-linear utilities, and their characteristics are known to the monopolist....

We study the welfare effects of parallel trade (PT) considering investment in quality. We thus revisit the case for PT in research-intensive industries. We find that PT may raise quality, depending on how preferences for quality differ across countries. Conditional on quality, consumer surplus...

In many industries, output is fixed by exogenous constraints, so firms compete by allocating a given stock of supplies between different markets. This paper shows that collusion in such industries leads firms to shift output from high-margin markets to low-margin markets. As a result, welfare is...

The two central pricing rules contained in most antitrust laws are prohibitions of below-cost pricing and prohibitions of discriminatory pricing. This article shows that the rule against discriminatory pricing may actually induce firms to charge exclusionary below-cost prices, even in the...

This note investigates the effects of a large horizontal merger on the shape of the 1-to-12 h price menus offered by parking garages in Paris. The merger caused low-end prices to increase proportionally more than high-end prices. This results in larger discounts on longer hours and hence in more...

We examine the average equilibrium price when quantity setting oligopolies price discriminate. It is known that for the price discrimination extension of Cournot competition the average price is independent of the extent of price discrimination whenever the demand is linear. We show that this...

We consider a two-period model in which duopolists sell experience goods and practice behavior-based price discrimination (BBPD). We give general conditions for when firms should offer a lower price to existing customers (‘pay-to-stay’) or to new customers (‘pay-to-switch’). We also...

We estimate consumer surplus gains and losses from concert ticket price discrimination. Fans purchasing low-priced tickets enjoy a surplus gain of about $9.26 per ticket while high-priced ticket buyers suffer a loss of about $17.63 per ticket.

Payment networks typically differentiate interchange fees across different merchant sectors. This paper shows that it is generally efficient for a regulator to leave the decision on the structure of interchange fees to payment networks.