An empirical analysis of competitive nonlinear pricing

Gaurab Aryal () and Maria Gabrielli

International Journal of Industrial Organization, 2020, vol. 68, issue C

Abstract: We estimate a model of competitive nonlinear pricing with multidimensional preference heterogeneity using individual level data on advertisements bought by local businesses (e.g., doctors, electricians) from two Yellow Page Directories in one U.S. city-market. Variation in individual choices and payments allows us to identify the joint density of preferences, marginal costs of publishing and common utility parameters. Our estimates suggest substantial welfare loss due to asymmetric information. Comparing duopoly outcomes with (counterfactual) monopoly outcomes, we find that with less competition (i) producer surplus increases substantially; (ii) more “low-type” consumers are excluded; (iii) product variety increases, but benefits accrue only to the “high-type” consumers; (iv) total consumer surplus decreases; (v) but its distribution, across consumers, does not change.

Keywords: Asymmetric information; Competitive nonlinear pricing; Multidimensional heterogeneity (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (6)

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Related works:
Working Paper: An Empirical Analysis of Competitive Nonlinear Pricing (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:68:y:2020:i:c:s0167718719300669

DOI: 10.1016/j.ijindorg.2019.102538

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