Measuring Market Power When Firms Price Discriminate

22 Pages Posted: 10 Apr 2017

See all articles by Levent Kutlu

Levent Kutlu

University of Texas Rio Grande Valley

Robin C. Sickles

Rice University - Department of Economics

Date Written: April 6, 2017

Abstract

We propose conduct parameter based market power measures within a model of price discrimination, extending work by Hazledine (2006) and Kutlu (2012) to certain forms of second degree price discrimination. We use our model to estimate the market power of U.S. airlines in a price discrimination environment. We find that a slightly modified version of our original theoretical measure is positively related with market concentration. Moreover, on average, market power for high-end segment is greater than that of low-end segment.

Keywords: Price Discrimination, Market Power, Conduct Parameter

JEL Classification: C57, L13, L40, L93

Suggested Citation

Kutlu, Levent and Sickles, Robin C., Measuring Market Power When Firms Price Discriminate (April 6, 2017). Available at SSRN: https://ssrn.com/abstract=2947973 or http://dx.doi.org/10.2139/ssrn.2947973

Levent Kutlu (Contact Author)

University of Texas Rio Grande Valley ( email )

1201 West University Dr
Edinburg, TX TX 78539
United States

HOME PAGE: http://https://faculty.utrgv.edu/levent.kutlu/

Robin C. Sickles

Rice University - Department of Economics ( email )

6100 South Main Street
Houston, TX 77005
United States

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