There is no widely accepted definition of price discrimination with differentiated products. Either absolute price-cost differences or percentage price-cost markups are used as benchmarks for comparison. I show that the two criteria are qualitatively different: one may indicate price...

We examine a durable goods monopolist's optimal dynamic price and product quality strategy when buyers are rational, have diverse tastes, and can trade used durables among themselves. Our analysis makes four main points. First, in contrast to the well-known time-inconsistency problem of the...

Mediating transactions through the Internet removes important cues that salespeople can use to assess a consumer's willingness to pay. We analyze whether dealers' difficulty in identifying consumer characteristics on the Internet and consumers' ease in finding information affect race and gender...

Price markups over marginal cost are often higher on "aftermarket" parts and services for durable goods than they are on the goods themselves. A popular explanation is that the aftermarket good is used as a "metering" device. This paper explores what happens in the metering model as foremarket...

We study how changes in market structure affect how firms engage in second degree price discrimination. Specifically, we study how a large incumbent cable firm changes its menu of price-quality offerings and mixed bundles in response to entry. Competition strongly decreases the rate at which...

This paper analyzes optimal pricing for information goods under incomplete information, when both unlimited-usage (fixed-fee) pricing and usage-based pricing are feasible, and administering usage-based pricing may involve transaction costs. It is shown that offering fixed-fee pricing in addition...

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...

According to conventional wisdom, if a monopolist operates in two separate markets whose respective demand functions can be ordered by elasticity, he will charge more on the market with the less elastic demand. In this paper we debunk the widespread canard that this follows from the first order...

This paper analyzes market segmentation in a two-sided market that consists of media consumers and advertisers. The analysis is motivated by a European Court of Justice Decision in October 2011, which allowed viewers to take advantage of international price differences and buy access to Premier...

We investigate the effect of a ban on third-degree price discrimination on the sustainability of collusion. We build a model with two firms that may be able to discriminate between two consumer groups. Two cases are analyzed: (i) Best-response symmetries so that profits in the static Nash...