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Wednesday, July 29, 2020 | History

2 edition of Competitive location on networks under discriminatory pricing found in the catalog.

Competitive location on networks under discriminatory pricing

Phillip J. Lederer

Competitive location on networks under discriminatory pricing

by Phillip J. Lederer

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  • 20 Currently reading

Published by INSEAD in Fontainbleau .
Written in English


Edition Notes

Statementby Phillip J. Lederer and Jacques-Franc ʹois Thisse.
SeriesWorking papers / INSEAD -- no.87/35
ContributionsThisse, Jacques-Franc ʹois.
The Physical Object
Pagination14p. ;
Number of Pages14
ID Numbers
Open LibraryOL13918966M

  Price discrimination is a selling strategy that charges customers different prices for the same product or service based on what the seller thinks they can get the customer to agree to. Abstract. This study describes a spatial model of price discrimination in two-sided media markets. Given that media platforms offer a uniform price for consumers and either a uniform or discriminatory price for advertisers, we compare a platform’s profit and welfare under these two different pricing .

Distribution networks are receiving more of the recognition they deserve as drivers of market success. Adapting your distribution network to changes in business strategy and growth is a path to competitive advantage. But choosing the best distribution network design from the myriad of options is .   According to economists, price discrimination comes in many forms. The mildest level (in terms of capturing consumer surplus) is “third-degree price discrimination,” by which retailers offer.

This article, which reports the theory of product bundling, is particularly relevant in the context of the digital economy. It also addresses the price discrimination theory of bundling. Firm's bundling decision may alter the nature of competition and thus have strategic effects in its competition against its rivals. In the case of competitive bundling, the strategic incentives to bundle. A company is offering Product X, a new generation media device, in a foreign market for the first time. The company's CEO favors the adoption of a pricing strategy that adds a 30 percent markup to costs.


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Competitive location on networks under discriminatory pricing by Phillip J. Lederer Download PDF EPUB FB2

Competitive pricing strategies in social networks. Ying‐Ju Chen. E-mail address: We determine the optimal network structure and compare uniform pricing and discriminatory pricing from the perspectives of firms and consumers.

Bertrand competition under network externalities, Journal of Economic Theory, /, ().Cited by: 8. Request PDF | Competitive pricing strategies in social networks | We study pricing strategies of competing firms selling heterogeneous products to consumers. Goods are substitutes and there are.

Downloadable. We study pricing strategies of competing firms selling heterogeneous products to consumers. Goods are substitutes and there are network externalities between neighboring consumers. In equilibrium, firms price discriminate based on the network positions and charge lower prices to more central consumers.

We also show that, under some conditions, firms' equilibrium profits decrease Cited by: 8. Competitive pricing strategies in social networks Ying-Ju Cheny Yves Zenouz Junjie Zhoux Septem Abstract We study pricing strategies of competing rms who sell heterogeneous products to a group of customers in a social network.

Goods are substitutes and each customer gains network externalities from her neighbors who consume the same. Competitive pricing strategies in social networks. Ying‐Ju Chen. E-mail In equilibrium, firms price discriminate based on the network positions and charge lower prices to more central consumers.

We also show that, under some conditions, firms' equilibrium profits decrease when either the network becomes denser or network effects increase Cited by: 8.

We consider a competitive location problem in which a new firm has to make decisions on the locations of several new facilities as well as on its pric. Competitive strategies subsidize the participation of some consumers in order to create a bandwagon effect on others.

This drastically intensifies competition and reduces average equilibrium prices. Because bandwagon effects are due to the incompatibility of networks, under perfect price-discrimination, both networks prefer to be compatible.

Competitive based pricing remains a simple, low risk way of quickly gauging prices, and in some cases it can be fairly accurate. Yet, it leads to enormously large missed opportunities, because companies employing the strategy end up not assessing their true value and get caught in a race to the bottom through industry group think.

Price discrimination -- selling the same product to different market segments at different prices -- allows companies to optimize profits, even in competitive markets.

It begins with customer segmentation, and Ron will show you practical segmentation strategies for both B2B and B2C contexts. The Robinson–Patman Act of (or Anti-Price Discrimination Act, Pub.

49 Stat. (codified at 15 U.S.C. § 13)) is a United States federal law that prohibits anticompetitive practices by producers, specifically price was designed to protect small retail shops against competition from chain stores by fixing a minimum price for retail products.

Cite this chapter as: Gabszewicz J.J., Thisse JF. () Competitive Discriminatory Pricing. In: Feiwel G.R. (eds) The Economics of Imperfect Competition and Employment. Even if output remains constant, price discrimination can reduce efficiency by misallocating output among consumers.

Legal Concerns. Although price discrimination is the producer’s or seller’s legal attempt to charge varying prices for the same product based on consumer demand, price discrimination can be illegal in some cases.

price that is higher than the perfectly competitive price, and can thus increase while the quantities allocated to each group of buyers under discrimination are, network c hoice of.

Prestige pricing occurs when a higher price is utilized to give an offering a high-quality image. Some stores have a quality image, and people perceive that perhaps the products from those stores are of higher quality.

Many times, two different stores carry the same product, but one store prices it higher because of the store’s perceived higher image. Anti-competitive practices One-click patent. The company has been controversial for its alleged use of patents as a competitive hindrance. The "1-Click patent" is perhaps the best-known example of 's use of the one-click patent against competitor Barnes & Noble's website led the Free Software Foundation to announce a boycott of Amazon in December Price discrimination is a microeconomic pricing strategy where identical or largely similar goods or services are transacted at different prices by the same provider in different markets.

Price discrimination is distinguished from product differentiation by the more substantial difference in production cost for the differently priced products involved in the latter strategy. K has a minimum on the compact set S x S. Condition () will hold with (z zB) chosen to globally minimize social cost K, so that existence of a location equilibrium is assured.

A.P. Hurter and P.J. Lederer, Duopoly with discriminatory pricing Under equilibrium prices, each firm maximizes its profit by minimizing the cost to both firms of. However, our model of price discrimination in Section 4 could be interpreted as one in which consumers pay a transport cost per product (but not per unit of each product).4 Competitive price discrimination.

The second main aim of the article is to use this competition-in-utility-space framework to investigate the profit, consumer surplus, and. Discrimination Pricing is the practice of charging different prices to different customers for the identical goods or services sold by the same supplier.

In price discrimination, a firm mainly strives to extract maximum consumer surplus for its goods or services in. Price discrimination can also have anti-competitive consequences. For example, dominant firms may lower prices in particular markets in order to eliminate vigorous local competitors.

However, there is considerable debate as to whether price discrimination is really a means of restricting competition. The price will remain at the same “competitive” level until profits reach a null value.

Aggressive competitive pricing can lead to a race to the bottom. For example, a firm can decide to employ an aggressive pricing policy with a mix of competitive pricing and penetration pricing by setting the price 10% lower than its competitors.Psychological pricing or price ending is a marketing practice based on the theory that certain prices have a psychological impact.

The retail prices are often expressed as odd prices: a little less than a round number, such as $ or £ The theory is that this drives demand greater than would be expected if consumers were perfectly.Personalized pricing and location decisions • Two-stage game • Firms choose their location on the Hotelling line.

• Firms compete with personalized prices (i.e., there is Bertrand competition in each and every location) • Equilibrium • Price schedules at stage 2: • Firm with the lowest cost prevails →price .