Intertemporal Price Discrimination in Storable Goods Markets

Igal Hendel and Aviv Nevo

American Economic Review, 2013, vol. 103, issue 7, 2722-51

Abstract: We study intertemporal price discrimination when consumers can store for future consumption needs. We offer a simple model of demand dynamics, which we estimate using market-level data. Optimal pricing involves temporary price reductions that enable sellers to discriminate between price sensitive consumers, who stockpile for future consumption, and less price-sensitive consumers, who do not stockpile. We empirically quantify the impact of intertemporal price discrimination on profits and welfare. We find that sales (i ) capture 25-30 percent of the gap between non-discriminatory profits and (unattainable) third-degree price discrimination profits, (ii ) increase total welfare, and (iii) have a modest impact on consumer welfare.

JEL-codes: D11 D12 L11 L12 L81 (search for similar items in EconPapers)
Date: 2013
Note: DOI: 10.1257/aer.103.7.2722
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Citations: View citations in EconPapers (96)

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Working Paper: Intertemporal Price Discrimination in Storable Goods Markets (2011)
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