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Wholesale Price Discrimination between High Street Retailers and Online Retailers

Author

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  • Hiroshi Aiura

    (Graduate School of Environmental Studies, Nagoya University)

Abstract

We analyze wholesale pricing and retail pricing when a monopolistic manufacturer sells its product to a high street retailer and an online electronic retailer, which have different selling qualities and marginal selling costs. We observe that (1) the wholesale price for an online electronic retailer is higher than that for a high street retailer if an online electronic retailer's selling cost advantage is greater than its selling quality disadvantage for all consumers buying products, and (2) the retail price of the e-retailer is necessarily lower than that of the c-retailer independent of conditions.

Suggested Citation

  • Hiroshi Aiura, 2007. "Wholesale Price Discrimination between High Street Retailers and Online Retailers," Economics Bulletin, AccessEcon, vol. 12(31), pages 1-8.
    • Handle: RePEc:ebl:ecbull:eb-07l80003
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    References listed on IDEAS

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    1. Bouckaert, Jan, 2000. "Monopolistic competition with a mail order business," Economics Letters, Elsevier, vol. 66(3), pages 303-310, March.
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    4. DeGraba, Patrick, 1990. "Input Market Price Discrimination and the Choice of Technology," American Economic Review, American Economic Association, vol. 80(5), pages 1246-1253, December.
    5. Wei-yu Kevin Chiang & Dilip Chhajed & James D. Hess, 2003. "Direct Marketing, Indirect Profits: A Strategic Analysis of Dual-Channel Supply-Chain Design," Management Science, INFORMS, vol. 49(1), pages 1-20, January.
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    Cited by:

    1. Haiyan Wang & Tatsuhiko Nariu, 2012. "Distribution Channel Management in an Internet Age: Equilibrium and Social Welfare," Journal of Industry, Competition and Trade, Springer, vol. 12(3), pages 285-298, September.
    2. Adachi, Takanori & Ebina, Takeshi, 2014. "Cost pass-through and inverse demand curvature in vertical relationships with upstream and downstream competition," Economics Letters, Elsevier, vol. 124(3), pages 465-468.
    3. Bacchiega, Emanuele & Randon, Emanuela & Zirulia, Lorenzo, 2012. "Strategic accessibility competition," Research in Economics, Elsevier, vol. 66(2), pages 195-212.
    4. Nakayama, Yuji, 2009. "The impact of e-commerce: It always benefits consumers, but may reduce social welfare," Japan and the World Economy, Elsevier, vol. 21(3), pages 239-247, August.

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    More about this item

    JEL classification:

    • L8 - Industrial Organization - - Industry Studies: Services
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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