A Dynamic Model of Price Discrimination and Inventory Management at the Fulton Fish Market

29 Pages Posted: 3 Jun 2009 Last revised: 17 Jul 2010

See all articles by Kathryn Graddy

Kathryn Graddy

Brandeis University - Department of Economics

George J. Hall

Brandeis University - Department of Economics and International Business School; Brandeis University - Department of Economics

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Date Written: May 2009

Abstract

We estimate a dynamic profit-maximization model of a fish wholesaler who can observe consumer characteristics, set individual prices, and thus engage in third-degree price discrimination. Simulated prices and quantities from the model exhibit the key features observed in a set of high quality transaction-level data on fish sales collected at the Fulton fish market. The model's predictions are then compared to the case in which the dealer must post a single price to all customers. We find the cost to the dealer of posting a uniform price to be extremely small.

Suggested Citation

Graddy, Kathryn and Hall, George J., A Dynamic Model of Price Discrimination and Inventory Management at the Fulton Fish Market (May 2009). NBER Working Paper No. w15019, Available at SSRN: https://ssrn.com/abstract=1413894

Kathryn Graddy

Brandeis University - Department of Economics ( email )

415 South Street MS 021
Waltham, MA 02453-2728
United States
781-736-8616 (Phone)
781-736-2269 (Fax)

HOME PAGE: http://people.brandeis.edu/~kgraddy/

George J. Hall (Contact Author)

Brandeis University - Department of Economics and International Business School ( email )

Mailstop 32
Waltham, MA 02454-9110
United States
781-736-2242 (Phone)

HOME PAGE: http://people.brandeis.edu/~ghall

Brandeis University - Department of Economics ( email )

Waltham, MA 02454-9110
United States

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