Using a spatial model of monopolistic competition, we investigate price discrimination in free-entry, zero-profit markets. We show that when brands are heterogeneous, competition does not prevent discrimination. The power to earn economic profits is not necessary for a firm to maintain...

Recent theoretical work has shown that price discrimination can take place in imperfectly competitive, as well as monopoly, markets. The persistence of higher retail margins on unleaded than on leaded gasoline during the 1980s suggests that discrimination may occur even in very competitive...

This article estimates the importance of route and airport dominance in determining the degree of market power exercised by an airline. The results indicate that an airline's share of passengers on a route and at the endpoint airports significantly influences its ability to mark up price above...

Most customers in electricity markets do not face prices that change frequently to reflect changes in wholesale costs, known as real-time pricing (RTP). We show that not only does time-invariant pricing in competitive markets lead to prices and investment that are not first best, it even fails...

In an unregulated electricity generation market, the capacity of transmission lines will determine the degree to which generators in different locations compete with one another. We show, however, that there may be no relationship between the effect of a transmission line in spurring competition...

A model with costly adjustment of production and costly inventories implies that wholesale gasoline prices will respond with a lag to crude oil cost shocks. Unlike explanations that rely upon menu costs, imperfect information, or long-term buyer/seller relationships, this model predicts that...