Competitive Nonlinear Pricing and Contract Variety
Competitive Nonlinear Pricing and Contract Variety

Author: Jian Shen

Publisher:

Published: 2016

Total Pages: 0

ISBN-13:

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We analyze markets with both horizontally and vertically differentiated products under both monopoly and duopoly. In the base model with two consumer types, we identify conditions under which entry prompts an incumbent to expand or contract its low end of the product line. Our analysis offers a novel explanation for the widespread use of 'fighting brands' and 'product line pruning.' We also extend our analysis to asymmetric firms and three types of consumers and show that depending on the specific environment, entry may lead the incumbent to expand or contract the middle range of its product line (middle contracts). Our results are mainly driven by interactions between horizontal differentiation (competition) and vertical screening of consumers.

Nonlinear Contracts and Vertical Restraints in Bilateral Duopoly
Nonlinear Contracts and Vertical Restraints in Bilateral Duopoly

Author: Paolo Ramezzana

Publisher:

Published: 2019

Total Pages: 58

ISBN-13:

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This paper studies the competitive effects of a variety of publicly observable nonlinear contracts and vertical restraints in bilateral duopoly. When suppliers offer menus of contracts and inputs are sufficiently differentiated, there exist equilibria in which both retailers purchase from both suppliers at wholesale prices above marginal cost to soften downstream competition. In these common agency equilibria, vertical restraints such as all-units discounts, market-share requirements and no-steering rules affect upstream competition for marginal sales and lead to higher prices and lower welfare than two-part tariffs. Whereas with sequential contracting the industry monopoly outcome is the unique equilibrium, with simultaneous contracting coordination failures may lead to less profitable equilibria.

Competitive Nonlinear Pricing
Competitive Nonlinear Pricing

Author: Jean-Charles Rochet

Publisher:

Published: 2014

Total Pages: 13

ISBN-13:

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We study competitive nonlinear pricing in a model involving simultaneously horizontal and vertical product differentiation. It is a particular case of a more general model of optimal contracting with uncertain participation that we study elsewhere (Rochet-Stole (1997)).

An Empirical Analysis of Competitive Nonlinear Pricing
An Empirical Analysis of Competitive Nonlinear Pricing

Author: Gaurab Aryal

Publisher:

Published: 2019

Total Pages: 42

ISBN-13:

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We estimate a model of competitive nonlinear pricing with multidimensional preference heterogeneity using individual level data on advertisements bought by local businesses (e.g., doctors, electricians) from two Yellow Page Directories in one U.S. city-market. Variation in individual choices and payments allow us to identify the joint density of preferences, marginal costs of publishing and common utility parameters. Our estimates suggest substantial welfare loss due to asymmetric information. Comparing duopoly outcomes with (counterfactual) monopoly outcomes, we find that with less competition (i) producer surplus increases substantially; (ii) more “low-type” consumers are excluded; (iii) product variety increases, but benefits accrue only to the “high-type” consumers; (iv) total consumer surplus decreases; (v) but its distribution, across consumers, does not change.

On Competitive Nonlinear Pricing
On Competitive Nonlinear Pricing

Author: Andrea Attardi

Publisher:

Published: 2015

Total Pages: 46

ISBN-13:

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Many financial markets rely on a discriminatory limit-order book to balance supply and demand. We study these markets in a static model in which uninformed market makers compete in nonlinear tariffs to trade with an informed insider, as in Glosten (1994), Biais, Martimort, and Rochet (2000), and Back and Baruch (2013). We analyze the case where tariffs are unconstrained and the case where tariffs are restricted to be convex. In both cases, we show that pure-strategy equilibrium tariffs must be linear and, moreover, that such equilibria only exist under exceptional circumstances. These results cast doubt on the stability of even well-organized financial markets.

Nonlinear Pricing
Nonlinear Pricing

Author: Robert B. Wilson

Publisher: Oxford University Press, USA

Published: 1993

Total Pages: 446

ISBN-13: 9780195115826

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What do phone rates, frequent flyer programs, and railroad tariffs all have in common? They are all examples of nonlinear pricing. Pricing is nonlinear when it is not strictly proportional to the quantity purchased. The Electric Power Research Institute has commissioned Robert Wilson to review the various facets of nonlinear pricing. The work starts with a general non-mathematical discussion, followed by a more technical presentation intended for readers with a fairly advanced background. Thorough and detailed, this study has ample examples of case studies from a variety of industries.

Industrial Organization
Industrial Organization

Author: Lynne Pepall

Publisher: John Wiley & Sons

Published: 2014-01-28

Total Pages: 741

ISBN-13: 1118250303

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Pepall's Industrial Organization: Contemporary Theory and Empirical Applications, 5th Edition offers an accessible text in which topics are organized in a manner that motivates and facilitates progression from one chapter to the next. It serves as a complete, but concise, introduction to modern industrial economics. The text uniquely uses the tools of game theory, information economics, contracting issues, and practical examples to examine multiple facets of industrial organization. The fifth edition is more broadly accessible, balancing the tension between making modern industrial analysis accessible while also presenting the formal abstract modeling that gives the analysis its power. The more overtly mathematical content is presented in the Contemporary Industrial Organization text (aimed at the top tier universities) while this Fifth Edition will less mathematical (aimed at a wider range of four-year colleges and state universities.