2 Naive Surplus Theory 2.1 Consumers who buy 0 or 1 unit I introduce the concept of surplus in one of the simplest models of demand. [This is the model underlying (Bakos and Brynjolfsson, 1999).] Consider a very large population of K consumers facing a market for a single good. Each consumer will buy either one or zero units of this good (per period), depending on the price. Each consumer has a...

Price dispersion is an important indicator of market efficiency. Internet-based electronic markets have the potential to reduce transaction costs, thereby creating more efficient, “frictionless” markets, as predicted by the “law of one price”. However, prior work has reported significant levels of price dispersion on the Internet, which is in contrast with theoretical predictions. A key feature...

Milk pricing in California is often controversial. Consumer advocates and their organizations periodically charge that retail milk prices are “unfair” or “too high” and call for public intervention in the fluid-milk market. The consumer view is expressed by Consumers Union, which after conducting surveys of retail milk prices in Los Angeles and San Francisco area food stores, charged that large...

OBJECTIVES To describe alternative policies aimed at encouraging price competition in generic drug markets in countries with strict price regulation, and to present some case studies drawn from the European experience. METHODS Systematic literature review of articles and technical reports published after 1999. RESULTS The shortcomings in consumer price competition observed in some European ...

Laboratory markets are conducted to evaluate the effects of consumer search costs on market performance. The primary research goal is to assess the behavioral relevance of Diamond’s (1971) paradoxical conclusion that the injection of a small consumer search cost alters the equilibrium price prediction from competitive to monopoly levels. Although monopoly prices are not consistently observed, w...

This paper employs the recently developed structural stability tests with unknown break point and two median unbiased estimation methods to model China inflation persistence over the most recent quarter of a century. Our empirical results suggest that the persistence of both consumer price inflation and retail price inflation has witnessed declines over the most recent period of low inflation, ...

Increasingly detailed consumer information makes sophisticated price discrimination possible. At fine levels of aggregation, demand may not obey standard regularity conditions. We propose a new randomized sales mechanism for such environments. Bidders can “buy-it-now” at a posted price, or “take-a-chance” in an auction where the top d > 1 bidders are equally likely to win. The randomized alloca...

Firms developing new products must often make a trade-o¤ between production costs and product quality: higher quality products are more valued by consumers, but also more costly to manufacture. We analyze this trade-o¤ in the context of demand uncertainty and strategic consumer behavior. Before the release of a product to a heterogeneous market of unknown size, a …rm must choose product quality...

 Overall, taking account of both coverage and formula effect differences and within the limitations of how price data is collected within the UK, the Retail Prices Index (RPI) is as good a consumer price index as one can get for uprating purposes. The systemic difference between the RPI and the Consumer Prices Index (CPI), currently (2015) running at 1.0 percentage points per annum, results pr...