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Nonlinear pricing and competition intensity in a Hotelling-type model with discrete product and consumer types

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  • Hernandez, Manuel A.

Abstract

This paper develops a Hotelling model with discrete product and consumer types. We analyze the impact of horizontal differentiation (competition intensity) on relative prices. We find that the optimal price ratio of high- to low-quality products decreases with less competition.

Suggested Citation

  • Hernandez, Manuel A., 2011. "Nonlinear pricing and competition intensity in a Hotelling-type model with discrete product and consumer types," Economics Letters, Elsevier, vol. 110(3), pages 174-177, March.
    • Handle: RePEc:eee:ecolet:v:110:y:2011:i:3:p:174-177
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    References listed on IDEAS

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    1. Lars A. Stole, 1995. "Nonlinear Pricing and Oligopoly," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 4(4), pages 529-562, December.
    2. Jean-Charles Rochet & Lars A. Stole, 2002. "Nonlinear Pricing with Random Participation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 69(1), pages 277-311.
    3. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
    4. J. Miguel Villas-Boas & Udo Schmidt-Mohr, 1999. "Oligopoly with Asymmetric Information: Differentiation in Credit Markets," RAND Journal of Economics, The RAND Corporation, vol. 30(3), pages 375-396, Autumn.
    5. Eric Maskin & John Riley, 1984. "Monopoly with Incomplete Information," RAND Journal of Economics, The RAND Corporation, vol. 15(2), pages 171-196, Summer.
    6. Stole, Lars A., 2007. "Price Discrimination and Competition," Handbook of Industrial Organization, in: Mark Armstrong & Robert Porter (ed.), Handbook of Industrial Organization, edition 1, volume 3, chapter 34, pages 2221-2299, Elsevier.
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    Cited by:

    1. Thiago Cacicedo, 2021. "Price discrimination and market concentration: Evidence from the laundry detergent market," Manchester School, University of Manchester, vol. 89(6), pages 594-609, December.
    2. Han, Haipeng & Lien, Donald & Lien, Jaimie W. & Zheng, Jie, 2022. "Online or face-to-face? Competition among MOOC and regular education providers," International Review of Economics & Finance, Elsevier, vol. 80(C), pages 857-881.
    3. Zhibing Lin, 2019. "Price and location competition in supply chain with horizontal altruistic retailers," Flexible Services and Manufacturing Journal, Springer, vol. 31(2), pages 255-278, June.
    4. He, Qingxin & Zheng, Xiaoyong, 2020. "Price discrimination across different ticket distribution channels: Evidence from the US-china flight market," China Economic Review, Elsevier, vol. 61(C).
    5. Pan Liu & Shu-ping Yi, 2018. "A study on supply chain investment decision-making and coordination in the Big Data environment," Annals of Operations Research, Springer, vol. 270(1), pages 235-253, November.

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