We study competitive nonlinear pricing in a model involving simultaneously horizontal and vertical product differentiation. It is a particular case of a more general model of optimal contracting with uncertain participation that we study elsewhere (Rochet-Stole (1997))

Many models in operations management assume that faced with excess inventory, retailers offer price discounts to increase sales. This discount is assumed to be a certain dollar amount per unit or a certain percent of the regular price. However, many retailers use nonlinear pricing, e.g. "Buy...

We analyse pricing, effort and tipping decisions in the online service "Google Answers". While users set a price for the answer to their question ex ante, they can additionally give a tip to the researcher ex post. In line with the related experimental literature we find evidence that tipping is...

In an auction-style listing at eBay, sellers have the option to set a posted price (also known as buy-it-now price), which allows buyers to instantly purchase an item before the start of the auction. This paper provides a rationale for such a selling mechanism. When many identical items are...

Economists typically assume that demand curves are downward sloping. We present evidence that increasing the price of an item from $44 to $49 may increase unit demand by up to 30%. This effect is substantial, has broad application, is easily replicated, and contradicts the downward-sloping...

This chapter surveys recent theoretical developments in the intersection of price discrimination and imperfect competition, emphasizing how the introduction of competition fundamentally alters some well-established results derived from models of monopoly pricing

We consider the general problem of price discrimination with nonlinear pricing in an oligopoly setting where firms are spatially differentiated. We characterize the nature of optimal pricing schedules, which in turn depends importantly upon the type of private information the customer possesses...

The canonical selection contracting programme takes the agent's participation decision as deterministic and finds the optimal contract, typically satisfying this constraint for the worst type. Upon weakening this assumption of known reservation values by introducing independent randomness into...

Using a game theoretic framework, we show that not only can pay-what-you-want pricing generate positive profits, but it can also be more profitable than charging a fixed price to all consumers. Further, whenever it is more profitable, it is also Pareto-improving. We derive conditions in terms of...

When selling a home, an important decision facing the homeowner is choosing an optimal listing price. This decision will depend in large part on how the chosen list price impacts the post negotiation final sale price of the home. In this study, we design an experiment that enables us to identify...