Price Discrimination and Price Dispersion in a Duopoly
Tommaso M. Valletti
University of London - Imperial College of Science, Technology and Medicine; University of Rome II; Centre for Economic Policy Research (CEPR)
FEEM Working Paper ETA 33.98
Abstract:
This paper analyzes the problem of price discrimination in a market where consumers have heterogeneous preferences both over a horizontal parameter (brand) and a vertical one (quality). Discriminatory contracts are characterized for different market structures. It is shown that price dispersion, i.e., the observed range of prices for each class of customers, increases almost everywhere as competition is introduced in the market. The findings are discussed with reference to the U.K. mobile telecommunications market.
JEL Classifications: D43, L13
Working Paper Series
Suggested Citation
Valletti, Tommaso M., Price Discrimination and Price Dispersion in a Duopoly. FEEM Working Paper ETA 33.98. Available at SSRN: http://ssrn.com/abstract=122035 or doi:10.2139/ssrn.122035
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