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Competition and Price Discrimination: Evidence from the Parking Garage Industry

29 Pages Posted: 6 Apr 2012 Last revised: 19 Sep 2014

Haizhen Lin

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy

Yijia Wang

NERA Economic Consulting

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Date Written: February 1, 2012

Abstract

We study the relationship between competition and price discrimination through an empirical examination of hourly price schedules in the parking garage industry. We find that the degree of price schedule curvature decreases with competition, implying a greater proportionate drop in low-end prices than in high-end prices when competition intensifies. Our findings suggest that competition constrains a firm’s capacity to exercise price discrimination, confirming the classic textbook theory. We also offer possible explanations for our findings, including a search cost explanation, for which we find some support in the data.

Keywords: competition, price curvature, price discrimination, consumer search, parking garage industry

Suggested Citation

Lin, Haizhen and Wang, Yijia, Competition and Price Discrimination: Evidence from the Parking Garage Industry (February 1, 2012). Available at SSRN: https://ssrn.com/abstract=2033463 or http://dx.doi.org/10.2139/ssrn.2033463

Haizhen Lin (Contact Author)

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy ( email )

Bloomington, IN 47405
United States

Yijia Wang

NERA Economic Consulting ( email )

50 Main Street, 14th Floor
White Plains, NY 10606
United States

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