A Dynamic Model of Price Discrimination and Inventory Management at the Fulton Fish Market

Kathryn Graddy () and George Hall ()

No 7315, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We estimate a dynamic profit-maximization model of a fish wholesaler who can observe consumer characteristics, set individual prices, and thus engage in third-degree price discrimination. Simulated prices and quantities from the model exhibit the key features observed in a set of high quality transaction-level data on fish sales collected at the Fulton fish market. The model’s predictions are then compared to the case in which the dealer must post a single price to all customers. We find the cost to the dealer of posting a uniform price to be extremely small.

Keywords: dynamic programming; fish; indirect inference; price discrimination; yield management (search for similar items in EconPapers)
JEL-codes: C15 D21 D4 L1 L81 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-mic and nep-mkt
Date: 2009-06

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Working Paper: A Dynamic Model of Price Discrimination and Inventory Management at the Fulton Fish Market (2009)
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