Multi-store ...rms are common in the retailing industry. Theory suggests that cross-elasticities between stores of the same ...rm enhance market power. To evaluate the importance of this e¤ect in the UK supermarket industry, we estimate a model of consumer choice and expenditure using three data sources: pro...t margins for each chain, a survey of consumer choices, and a data set of store chara...

We analyze the impact of insurer competition on health care markets using a model of premium setting, hospital-insurer bargaining, household demand for insurance, and individual demand for hospitals. Increased insurer competition may lead to lower premiums; it may also increase health providers’ leverage to negotiate higher prices, thereby mitigating premium reductions. We use detailed Californ...

This paper develops a novel approach to modeling preferences in monopolistic competition models with a continuum of goods. In contrast to the commonly used CES preferences, which do not capture the e¤ects of consumer income and the intensity of competition on equilibrium prices, the present preferences can capture both e¤ects. The relationship between consumers’ incomes and product prices is th...

We analyze a model of market competition in which two identical firms choose prices as well as how to present, or “frame”, their products. A consumer is randomly assigned to one firm, and whether he makes a price comparison with the other firm is a probabilistic function of the firms’ framing strategies. We analyze Nash equilibria in this model. In particular, we show how the answers to the fol...

This paper is a …rst look at the dynamic e¤ects of BBPD in a horizontally di¤erentiation product market, where …rms need to invest in advertising to generate awareness. When a …rm is able to recognize customers with di¤erent purchasing histories, it may send them targeted advertisements with di¤erent prices. We show that in comparison to no discrimination, …rms reduce their advertising e¤orts, ...

Managing pricing is a challenging task due to the significant impact on shares and the likelihood of strong consumer and competitor reaction. The major contributions of this paper are to assess comprehensive share response to temporary, evolving and structural changes in prices and to determine the level of market share as a function of levels of prices. For the empirical analysis, we examine t...

A stricter merger control policy increases the expectation of future price competition. In response, firms increase product differentiation to sustain higher prices. Failing to account for such policy-variant prices may lead to overestimation of the increase in consumer surplus due to the stricter merger policy, rendering the policy analysis subject to the Lucas Critique. D 2004 Elsevier B.V. A...

David S. Johnson is Assistant Commissioner of Consumer Prices and Price Indexes in the Office of Prices and Living Conditions, U.S. Bureau of Labor Statistics, E-mail: [email protected]; Timothy M. Smeeding is Maxwell Professor of Public Policy at Syracuse University, E-mail: [email protected]. edu; and Barbara Boyle Torrey is Visiting Fellow, Population Reference Bureau, E-mail: btorrey@prb...

Much has been said about ecolabeling in the last few years, with several studies investigating hypothetical consumer demand for ecolabeled seafood products, where the label indicates no overfishing of the stocks. Most studies have focused on consumers choosing between labeled and unlabeled products of the same species. In a recent survey done in the US, consumers were asked to trade-off amongst...

This note presents an ordered search model in which consumers search both for price and product fitness. We construct an equilibrium in which there is price dispersion and prices rise in the order of search. The top firms in consumer search process, though charge lower prices, earn higher profits due to their larger market shares.