Quality-based Price Discrimination: Evidence from Internet Retailers’ Shipping Options
Han Li and
Emin Dinlersoz ()
Journal of Retailing, 2012, vol. 88, issue 2, 276-290
This paper tests various implications of quality-based price discrimination theory in the context of internet book retailers’ shipping menus. Many internet retailers create quality variants of a homogeneous good by bundling it with several shipping options that differ by delivery time. This practice can allow retailers to extract further surplus from consumers through quality-based price discrimination. We find that the design of shipping menus offered by large retailers is consistent with main implications of quality-based price discrimination theory. Fringe sellers, however, do not appear to engage in price discrimination based on quality.
Keywords: Price discrimination; Online retailing; E-commerce; E-retailing; Shipping; Delivery; Shipping fees; Shipping options; Vertical differentiation (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jouret:v:88:y:2012:i:2:p:276-290
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