An Empirical Investigation of the Welfare Effects of Banning Wholesale Price Discrimination

Sofia Villas-Boas

Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series from Department of Agricultural & Resource Economics, UC Berkeley

Abstract: Economic theory does not provide sharp predictions on the welfare effects of banning wholesale price discrimination: if downstream costs differences exist then discrimination shifts production inefficiently, towards high cost retailers, so a ban increases welfare; if differences in price elasticity of demand across retailers exist, discrimination may increase welfare if more market is covered, so a ban reduces welfare. Using retail prices and quantities of coffee brands sold by German retailers, I estimate a model of demand and supply and separate cost and demand differences. Simulating a ban on wholesale price discrimination has positive welfare effects in this market, and less if downstream cost differences shrink, or with less competition.

Keywords: Uniform Wholesale Pricing; Oligopoly models of multiple manufacturers and retailers; Coffee Retail Market; Welfare; Social and Behavioral Sciences (search for similar items in EconPapers)
Date: 2008-10-07
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: An empirical investigation of the welfare effects of banning wholesale price discrimination (2009)
Working Paper: An Empirical Investigation of the Welfare Effects of Banning Wholesale Price Discrimination (2009)
Working Paper: An empirical investigation of the welfare effects of banning wholesale price discrimination (2008)
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