Competition for exclusive customers: comparing equilibrium and welfare under one‐part and two‐part pricing
| Autor: | Glenn A. Woroch, James D. Reitzes |
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| Rok vydání: | 2008 |
| Předmět: | |
| Zdroj: | Canadian Journal of Economics/Revue canadienne d'économique. 41:1046-1086 |
| ISSN: | 1540-5982 0008-4085 |
| DOI: | 10.1111/j.1540-5982.2008.00496.x |
| Popis: | This paper compares one-part pricing and two types of two-part pricing in a general discretecontinuous choice model, providing more extensive welfare results than prior literature. Under two-part pricing, …rms may set …xed fees with or without “unit-price commitment.” When unitprice commitment is present, both …xed fees and unit prices are set before consumers choose their exclusive suppliers. In the absence of unit-price commitment, consumers choose exclusive suppliers based on known …xed fees and anticipated future unit prices, resulting in high unit prices consistent with models of “aftermarket monopolization.” Of the three possible pricing policies, we …nd that two-part pricing with unit-price commitment is …rms’dominant unilateral pricing policy, and it also yields the highest joint pro…ts (under appropriate demand assumptions). In terms of both consumer and social welfare, two-part pricing without unit-price commitment is dominated by the other pricing policies. With su¢ ciently elastic usage demand and su¢ ciently small customerspeci…c …xed costs, one-part pricing produces the highest consumer and social welfare, but the lowest …rm pro…ts, of the three pricing policies. JEL classi…cation: L1, D4 Keywords: two-part pricing, aftermarket monopolization, Bertrand competition, discrete-continuous random-utility model. |
| Databáze: | OpenAIRE |
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