Competition and Price Discrimination in Yellow Pages Advertising

32 Pages Posted: 25 Jun 2001

See all articles by Meghan R. Busse

Meghan R. Busse

University of California, Berkeley - Haas School of Business

Marc Rysman

Boston University - Department of Economics

Date Written: June 2001

Abstract

This paper examines the effect of competition on second degree price discrimination in display advertising in Yellow Page directories. Recent theoretical work makes conflicting predictions about the effect of competition on curvature. Our main empirical finding is that competition increases the curvature of the price schedule, meaning that purchasers of the largest ads see their prices fall the most in response to competition. We also present evidence of menu costs in adjusting pricing schedules and address this issue in estimation. The magnitudes that we find could be relevant for welfare calculations in the face of price discrimination.

JEL Classification: L13, L11

Suggested Citation

Busse, Meghan R. and Rysman, Marc, Competition and Price Discrimination in Yellow Pages Advertising (June 2001). Available at SSRN: https://ssrn.com/abstract=274663 or http://dx.doi.org/10.2139/ssrn.274663

Meghan R. Busse (Contact Author)

University of California, Berkeley - Haas School of Business ( email )

2220 Piedmont Avenue, #1900
Berkeley, CA 94720-1900
United States
510-642-9489 (Phone)
510-643-5180 (Fax)

HOME PAGE: http://faculty.haas.berkeley.edu/meghan/index.html

Marc Rysman

Boston University - Department of Economics ( email )

270 Bay State Road
Boston, MA 02215
United States
617-353-3086 (Phone)
617-353-4449 (Fax)

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