Intertemporal Price Discrimination in Sequential Quantity-Price Games

James Dana and Kevin Williams

No 26794, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper develops an oligopoly model in which firms first choose capacity and then compete in prices in a series of advance-purchase markets. We show that when the elasticity of demand falls across periods, strong competitive forces prevent firms from utilizing intertemporal price discrimination. We then enrich the model by allowing firms to use inventory controls, or sales limits assigned to individual prices. We show that competing firms can profitably use inventory controls. Thus, although typically viewed as a tool to manage demand uncertainty, we show that inventory controls can also facilitate price discrimination in oligopoly.

JEL-codes: D21 D43 L0 L13 (search for similar items in EconPapers)
Date: 2020-02
New Economics Papers: this item is included in nep-com, nep-gth, nep-ind, nep-mic, nep-ore and nep-reg
Note: IO
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Citations: View citations in EconPapers (4)

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