We analyze models of product differentiation with perfect price discrimination and free entry. With a fixed number of firms, and in the absence of coordination failures, perfect price discrimination provides incentives for firms to choose product characteristics in a socially optimal way. However, with free entry, the number of firms is always excessive. Our results apply to a large class of mo...

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In this paper, I develop a duopoly location model of differentiated products in which consumers’ product preferences vary positively with product prices. The level of preference price-dependence (“PPD”) is allowed to vary across consumers. I find that equilibrium prices increase with the PPD level of the marginal, or “just indifferent,” consumer, but are not influenced by the PPD levels of othe...

Previous research has examined whether price dispersion exists in theoretically highly efficient Internet markets. However, much of the previous work has been focused on industries with low cost and undifferentiated products. In this paper, we examine the presence of price dispersion and product differentiation using data on the airline ticket offerings of online travel agents (OTAs). We find t...

Six hens pecked a key (Experiment 1) or pushed a door (Experiment 2) to obtain food reinforcement. In both experiments and as an analogue of price changes, the response requirements were varied in two ways: by increasing the number of responses required and by increasing the required force of each response. The two price manipulations (response number and response force) had different effects o...

The note explores a vertical differentiation model with a continuous nonuniform consumers’ distribution. First a result concerning the finiteness property obtained with uniform consumers’ distribution is generalized. Second we prove an existence result of price equilibrium when the distribution is concave. Finally we exhibit a counter-example to the existence of price equilibrium to show that t...

Several authors have argued that because modern computing and communications technologies reduce buyer search costs and other market inefficiencies, there should be intense price competition between sellers in electronic markets. This paper examines this prediction using data on the airline ticket offerings of online travel agents (OTA). We find that different OTAs offer tickets with substantia...

The rising prices of pharmaceuticals have generated considerable, and often acrimonious, debate. Yet, there is little theoretical work or empirical evidence on pharmaceutical entry-pricing strategies or on the time paths of the prices of new entrants versus incumbents. This study explores the entry pricing strategies of pharmaceutical manufacturers. Previous theoretical models have considered a...

We estimate hedonic price functions for premium wine from Australia and New Zealand, differentiating implicit prices for sensory quality ratings, wine varieties, and regional as well as winery brand reputations over the vintages 1992 to 2000. For Australia, the results suggest regional reputations in general are becoming increasingly significant through time, indicating intensifying regional qu...

A firm facing price dependent stochastic demand aims to maximize its total expected profit over a planning horizon. In addition to the regular unit selling price, the firm can utilize quantity discounts to increase sales. We refer to this dual-pricing strategy as quantity-based price differentiation. At the beginning of each period, the firm needs to make three decisions: replenish the inventor...