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Competition and Price Discrimination in Yellow Pages Advertising

Author

Listed:
  • Meghan R. Busse

    (Haas School of Business)

  • Marc Rysman

    (Department of Economics)

Abstract

This paper examines the effect of competition on second degree price discrimination in display advertising in Yellow Page directories. Recent theoretical work makes conflicting predictions about the effect of competition on curvature. Our main empirical finding is that competition increases the curvature of the price schedule, meaning that purchasers of the largest ads see their prices fall the most in response to competition. We also present evidence of menu costs in adjusting pricing schedules and address this issue in estimation. The magnitudes that we find could be relevant for welfare calculations in the face of price discrimination.

Suggested Citation

  • Meghan R. Busse & Marc Rysman, 2001. "Competition and Price Discrimination in Yellow Pages Advertising," Yale School of Management Working Papers ysm207, Yale School of Management.
    • Handle: RePEc:ysm:somwrk:ysm207
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    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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