Price Discrimination and Price Dispersion in a Duopoly
39 Pages Posted: 6 Nov 1998
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 Classification: D43, L13
Suggested Citation: Suggested Citation
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