Structural Analysis of Nonlinear Pricing

Yao Luo, Isabelle Perrigne and Quang Vuong

Working Papers from University of Toronto, Department of Economics

Abstract: This paper proposes a methodology for analyzing nonlinear pricing data with an illustration on cellular phone. The model incorporates consumer exclusion. Assuming a known tariff, we establish identification of the model primitives using the first-order conditions of both the firm and the consumer up to a cost parameterization. Next, we propose a new one-step quantile-based nonparametric method to estimate the consumers’ inverse demand and their type distribution. We show that our nonparametric estimator is root-N-consistent. We then introduce unobserved product heterogeneity with an unknown tariff. We show how our identification and estimation results extend. Our analysis of cellular phone consumption data assesses the performance of alternative pricing strategies relative to nonlinear pricing.

Keywords: Nonlinear Pricing; Nonparametric Identification; Empirical Processes; Quantile; Transformation Model; Unobserved Heterogeneity; Telecommunication (search for similar items in EconPapers)
JEL-codes: C5 L8 (search for similar items in EconPapers)
Pages: Unknown pages
Date: 2014-10-01
New Economics Papers: this item is included in nep-com, nep-ecm and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Structural Analysis of Nonlinear Pricing (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:tor:tecipa:tecipa-518

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