Price Discrimination in Markets for Experts’ Services
نویسندگان
چکیده
This article studies the consequences of price discrimination in a market for experts’ services. In the case of experts markets, where the expert observes the intervention that a consumer needs to fix his problem and also provides a treatment, price discrimination proceeds along the dimension of quality of advice offered. High quality advice and appropriate treatment is provided to the most profitable market segment only. Less profitable consumers are induced to demand either unnecessary or insufficient procedures. The welfare consequences of price discrimination are ambiguous: On the one hand, price discrimination increases the number of consumers that get an intervention. On the other hand, some consumers that are efficiently served under nondiscrimination get the wrong procedure if the expert can discriminate
منابع مشابه
The Costs and Benefits of Long-Distance Entry: Regulation and Non-Price Discrimination
A primary goal of the 1996 Telecommunications Act is to encourage competition in longdistance telephone markets. Four years after passage of this legislation, Bell Operating Companies (“BOCs”) have been granted permission to offer long-distance services in only one state. The regulatory barrier to entry is justified on grounds that the BOCs have the ability to discriminate against incumbent lon...
متن کاملA Theory of Fraud and Over-Consumption in Experts Markets
Consumers often have to rely on an expert’s diagnosis to assess their needs. If the expert is also the seller of services, he may use his informational advantage to induce overconsumption. Empirical evidence suggests that over-consumption is a pervasive phenomenon in experts markets. We prove the existence of equilibrium over-consumption in an otherwise purely competitive model. This market fai...
متن کاملA Theory of Fraud and Overtreatment in Experts Markets
Consumers often rely on an expert’s diagnosis to assess their needs. If the expert is also the seller of services, he may use his informational advantage to induce overtreatment, which is a pervasive phenomenon in experts markets. We offer and discuss conditions leading to equilibrium overtreatment in an otherwise purely competitive model. This market failure results from consumers’ ability to ...
متن کاملPrice Discrimination in Many-to-Many Matching Markets∗
We study second-degree price discrimination in markets where the product traded by the monopolist is access to other agents. We derive necessary and sufficient conditions for the welfareand the profit-maximizing mechanisms to employ a single network or a menu of non-exclusive networks. We characterize the optimal matching schedules under a wide range of preferences, derive implications for pric...
متن کاملBeyond price mechanisms: How much can service help manage the competition from gray markets?
Companies operating global supply chains in various industries struggle with parallel importers diverting goods from authorized channels to gray markets. While the existing gray market literature mainly focuses on pricing, in this paper we develop a model to examine the role of demand enhancing services as non-price mechanisms for coping with gray markets. We consider a manufacturer that sells ...
متن کامل