EconPapers    
Economics at your fingertips  
 

Coupons and price discrimination in vertically-correlated markets

Jin-Li Hu (), Yu-Hsiu Chiou and Hong Hwang
Additional contact information
Yu-Hsiu Chiou: Department of International Trade, Tak-Ming College, Taiwan, Postal: Department of International Trade, Tak-Ming College, Taiwan
Hong Hwang: Department of Economics, National Taiwan University and Sun Yat-Sen Institute for Social Sciences and Philosophy, Academia Sinica, Taiwan, Postal: Department of Economics, National Taiwan University and Sun Yat-Sen Institute for Social Sciences and Philosophy, Academia Sinica, Taiwan

Managerial and Decision Economics, 2004, vol. 25, issue 1, 29-40

Abstract: This research analyzes the non-cooperative and cooperative strategies with respect to manufacturer and retailer coupons. In a model with one manufacturer selling its product to one retailer, it is found that the retailer can achieve third-degree price discrimination equilibrium in retail markets by issuing coupons to demanders with higher elasticity. Although facing only one retailer, the manufacturer can also achieve the same third-degree price discrimination equilibrium by issuing coupons directly to demanders of higher elasticity. However, when only one firm issues the coupon, both manufacturer and retailer coupons can help alleviate the channel profit loss due to double marginalization. If the manufacturer and the retailer non-cooperatively issue coupons, then the subgame-perfect Nash equilibrium outcomes are equivalent to those under the successive third-degree price discrimination. Moreover, cooperative strategies between the manufacturer and the retailer can eliminate double marginalization, achieve the vertical integration effect, and lead to higher profits, consumer surpluses, and social surpluses than non-cooperative coupon strategies. Copyright © 2004 John Wiley & Sons, Ltd.

Date: 2004
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.1002/mde.1132 Link to full text; subscription required (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:25:y:2004:i:1:p:29-40

Access Statistics for this article

Managerial and Decision Economics is currently edited by Antony Dnes

More articles in Managerial and Decision Economics from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().

 
Page updated 2019-11-12
Handle: RePEc:wly:mgtdec:v:25:y:2004:i:1:p:29-40