Intertemporal Price Discrimination in Storable Goods Markets

Igal Hendel and Aviv Nevo

No 16988, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study intertemporal price discrimination when consumers can store for future consumption needs. To make the problem tractable we offer a simple model of demand dynamics, which we estimate using market level data. Optimal pricing involves temporary price reductions that enable sellers to discriminate between price sensitive consumers, who anticipate future needs, and less price-sensitive consumers. We empirically quantify the impact of intertemporal price discrimination on profits and welfare. We find that sales: (1) capture 25-30% of the profit gap between non-discriminatory and third degree price discrimination profits, and (2) increase total welfare.

JEL-codes: D43 E3 E30 L1 L13 (search for similar items in EconPapers)
Date: 2011-04
New Economics Papers: this item is included in nep-com, nep-ind and nep-mkt
Note: EFG IO ME PR
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Citations: View citations in EconPapers (6)

Published as “Intertemporal Price Discrimination in Storable Goods Markets”, American Economic Review 103(7), December 2013, 2722-51 (joint with Igal Hendel).

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Journal Article: Intertemporal Price Discrimination in Storable Goods Markets (2013)
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