Retailers may enjoy stable cartel rents in their output market through the formation of a buyer group in their input market. A buyer group allows retailers to credibly commit to increased input prices, which serve to reduce combined final output to the monopoly level; increased input costs are...

This paper sheds light on a recent empirical controversy about the effect of competition on price discrimination in airline markets (Borenstein and Rose (1994), Gerardi and Shapiro, (2009)). We introduce individual demand uncertainty into Hotelling’s model of horizontal product differentiation...

When products are sold in advance, i.e. prior to consumption, consumers trade off an early, uninformed purchase at a low price against a late, informed purchase at a high price. This paper considers the effect of market structure on the prevalence of advance selling. We show that in an...

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 sheds light on an empirical controversy about the effect of competition on price discrimination. We introduce individual demand uncertainty into Hotellingś model of product differentiation and show that firms offer advance purchase discounts. Consumers choose between an early...

This paper sheds light on an empirical controversy about the effect of competition on price discrimination. We introduce individual demand uncertainty into Hotelling’s model of product differentiation and show that firms offer advance purchase discounts. Consumers choose between an early...

We introduce a Generalized Nested Logit model of demand for bundles that can be estimated sequentially and virtually eliminates any challenge of dimensionality related to large choice sets. We use it to investigate quantity discounts for carbonated soft drinks by simulating a counterfactual with...

This paper sheds light on a recent empirical controversy about the effect of competition on price discrimination in airline markets (Borenstein and Rose (1994), Gerardi and Shapiro, (2009)). We introduce individual demand uncertainty into Hotelling’s model of horizontal product differentiation...

There are well-documented episodes for which prices remained at supracompetitive levels even after a cartel had been shut down by the competition authority. As long as market conditions remain reasonably stable, it is quite possible that collusive prices will still be incentive compatible so the...