Competition and Price Discrimination: Evidence from the Parking Garage Industry

27 Pages Posted: 22 Sep 2015

See all articles by Haizhen Lin

Haizhen Lin

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

Isabelle Wang

NERA Economic Consulting

Multiple version iconThere are 2 versions of this paper

Date Written: September 2015

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.

Suggested Citation

Lin, Haizhen and Wantg, Yijia, Competition and Price Discrimination: Evidence from the Parking Garage Industry (September 2015). The Journal of Industrial Economics, Vol. 63, Issue 3, pp. 522-548, 2015. Available at SSRN: https://ssrn.com/abstract=2663749 or http://dx.doi.org/10.1111/joie.12080

Haizhen Lin (Contact Author)

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

Bloomington, IN 47405
United States

Yijia Wantg

NERA Economic Consulting ( email )

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

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