Costs, density economies, and differential pricing in the U.S. railroad industry

Differential Pricing When Costs Differ: A Welfare Analysis∗

This paper analyzes the welfare effects of monopoly differential pricing in the important but largely neglected case where costs of service differ across consumer groups. Cost-based differential pricing is shown to increase total welfare and consumer welfare relative to uniform pricing for broad classes of demand functions, even though total output can still fall or the output allocation betwee...

Quantifying search and switching costs in the US auto insurance industry

I estimate demand for auto insurance in the presence of two types of market frictions: search and switching costs. I develop an integrated utility-maximizing model in which consumers decide over which and how many companies to search and from which company to purchase. My modelling approach rationalizes observed consideration sets as being the outcomes of consumers’ search processes. I find sea...

Payment Scale Economies , Competition , and Pricing

Competitive Pricing in Socially Networked Economies

In the context of a socially networked economy, this paper demonstrates an Edgeworth equivalence between the set of competitive allocations and the core. Each participant in the economy may have multiple links with other participants and the equilibrium network may be as large as the entire set of participants. A clique is a group of people who are all connected with each other. Large cliques, ...

The Pricing of Art and the Art of Pricing: Pricing Styles in the Concert Industry

We document the existence of pricing styles in the concert industry. Artists differ in the extent to which they rely on secondand third-degree price discrimination and in how likely they are to sell out concerts. Most strikingly, artists who use multiple seating categories are more likely to vary prices across markets and less likely to sell out concerts. These patterns are difficult to explain...