Zone Pricing in Retail Oligopoly
نویسنده
چکیده
Multi-store retailers have the ability to offer different prices based on the geography of their stores. They sometimes do, but often only to a limited extent. This is observed in home improvement retailing, where the large retail chains charge different prices nationally but opt not to set prices store-by-store or even by market. Instead, prices are assigned to zones spanning several markets that differ in significant ways. If these firms were monopolists, this would represent a missed opportunity to price discriminate and increase profits. With competitive interaction, however, price discrimination has an ambiguous effect on both profits and consumer welfare.
منابع مشابه
ZONE PRICING IN RETAIL OLIGOPOLY By
We quantify the welfare effects of zone pricing, or setting common prices across distinct markets, in retail oligopoly. Although monopolists can only increase profits by price discriminating, this need not be true when firms face competition. With novel data covering the retail home improvement industry, we find that Home Depot would benefit from finer pricing but that Lowe’s would prefer coars...
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