Strategic Delays of Delivery, Market Separation and Demand Discrimination
Eric Avenel () and
The Centre for Market and Public Organisation from The Centre for Market and Public Organisation, University of Bristol, UK
We show that an adequate choice of delays to deliver a durable good allows a monopolist to soften the intra-brand price competition between his two retailers on two different markets, when consumers suffer a switching cost to buy on the market where they are not located. To prevent each retailer from selling on both markets, the upstream producer increases the delay of delivery on the market where the willingness to pay is the lowest. It therefore separates the markets across time, by orientating consumers to the appropriate downstream retailer. Consumers pay their highest valuation, and a price differential higher than the switching cost persists in equilibrium. We discuss the application of our findings to the European car market.
Keywords: durable good; switching cost; discrimination; intrabrand competition; European car market (search for similar items in EconPapers)
JEL-codes: L12 L22 L40 (search for similar items in EconPapers)
Pages: 30 pages
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Working Paper: Strategic delays of delivery, market separation and demand discrimination (2003)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:bri:cmpowp:04/112
Access Statistics for this paper
More papers in The Centre for Market and Public Organisation from The Centre for Market and Public Organisation, University of Bristol, UK Contact information at EDIRC.
Bibliographic data for series maintained by ().