National pricing with local quality competition

Tommy Gabrielsen, Bjørn Olav Johansen () and Odd Rune Straume
Additional contact information
Bjørn Olav Johansen: University of Bergen

No 09/2020, NIPE Working Papers from NIPE - Universidade do Minho

Abstract: We study the incentives of national retail chains to adopt national (uniform) prices across local markets that differ in size and competition intensity. In addition to price, the chains may also compete along a quality dimension, and quality is always set locally. We show that absent quality competition, the chains will never use national pricing. However, if quality competition is sufficiently strong there exist equilibria where at least one of the chains adopts national pricing. We also identify cases in which national pricing benefi ts (harms) all consumers, even in markets where such a pricing strategy leads to higher (lower) prices.

Keywords: National pricing; local pricing; retail chains; price and quality competition (search for similar items in EconPapers)
JEL-codes: L11 L13 L21 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-com and nep-reg
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Related works:
Journal Article: National pricing with local quality competition (2023)
Working Paper: National pricing with local quality competition (2020)
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