The second chance offer is a common seller practice on eBay. It consists of price discrimination against the losing bidder, who is offered an identical item at the value of his or her highest bid. Prior work has shown that, if the goods are private-value goods and price discrimination is certain, rational bidders can anticipate it and accordingly modify their bidding strategies; this results in...

Introduction Recent advances in the ability to track and analyze customer traces in electronic commerce have led to a lively debate about the promise of dynamic pricing. On the promise side, online retailers may use the customer’s browsing behavior to learn about aggregate and individual preferences. This type of information would enable online retailers to personalize pricing with coupons and ...

According to the conventional theory, rebates are but one of many ways to price discriminate among consumers. The firm sells at the shelf price to those willing to pay more for the product and at a lower, rebated price, to those willing to pay less, achieving the necessary separation by relying on the higher costs of redeeming rebates of high willingness-to-pay consumers. This theory, however, ...

We explore the relationship between shelf prices and manufacturers’ coupons for 25 readyto-eat breakfast cereals. We find that shelf prices are lower during periods when coupons are available. This result is inconsistent with static monopoly price discrimination under a broad range of assumptions. We present evidence that is inconsistent with both dynamic theories of price discrimination and ex...

The model in Verboven (2002) is extended to include non-zero price elasticities and behavior in the fuel market is modelled explicitly. With the use of simulations it is shown, that this makes quite a difference and, therefore, might lead to bias in parameter estimates

This paper examines the effect of the MFC rules adopted by Medicaid on both price dispersion and price levels in the wholesale pharmaceutical market. Theory suggests we should see less dispersion in products with more ex ante price dispersion. Using data which can only measure some dimensions of price discrimination, I find that these types of discrimination fall for products sold to hospitals,...

This paper examines the welfare effects of third degree price discrimination by an intermediate good monopolist selling to downstream firms with bargaining power. One of the downstream firms (the “chain store”) may have a greater ability than rivals to integrate backward into the supply of the input. In addition to this outside option, the firms’ relative bargaining powers depend on their disag...

Markets for transport are often characterised by unequal demand in both directions: every morning during peak hours the trains are crowded while moving towards the direction of large cities, whereas they may be almost empty in the other direction. In this paper we discuss the implications of these imbalances for price setting of transport firms. From the viewpoint of economic theory, two regime...

In this paper, we empirically test the relation between price discrimination and product market competition in a two-sided market environment using a new data set of Spanish local TV stations that provides information on subscription and advertising prices per station for 1996, 1999 and 2002. Due to changes in regulation during this period affecting the degree of local market competition, we us...