تبعیض قیمت موقتی و رقابت
|کد مقاله||سال انتشار||مقاله انگلیسی||ترجمه فارسی||تعداد کلمات|
|18153||2010||21 صفحه PDF||سفارش دهید||محاسبه نشده|
Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Journal of Economic Behavior & Organization, Volume 73, Issue 2, February 2010, Pages 273–293
In this study we investigate the impact of competition on markets for non-durable goods where intertemporal price discrimination is possible. We develop a simple model of different potential scenarios for intertemporal price discrimination and implement it in a laboratory experiment. We compare the outcomes in monopolies and duopolies. Surprisingly, we find that competition does not necessarily prevent intertemporal price discrimination, as our model predicts. However, competition generally reduces sales prices, but by far less than theory predicts. As expected – but not predicted by our simple model – competition increases efficiency.
The modern discussion on intertemporal price discrimination started with the Coase Conjecture (Coase, 1972), which states that a monopolist, who sells durable goods in the absence of a commitment device, is not able to price discriminate and will even be forced to sell at marginal cost. The Coase Conjecture was formalised by Stokey (1981) and proven to hold in the continuous time limit with a continuum of sufficiently patient buyers and constant marginal cost. Gul et al. (1986) show that the Coase Conjecture also holds in a game-theoretic framework under the same cost and demand assumptions. Under certain circumstances, monopolists can eliminate, or at least alleviate, the intertemporal commitment problem. Butz (1990) shows that the monopolist can at least secure the static monopoly profit by using best-price provisions as a commitment device. Another way of maintaining some monopoly power is a credible pre-commitment to limit production (Bulow, 1982). The use of non-stationary strategies can also help to overcome the commitment problem (Ausubel and Deneckere, 1989). However, in all these cases monopolists can never achieve profits higher than those that could be achieved by credibly committing to the static monopoly price. If one relaxes the assumption of a continuum of consumers then monopolists may not only be able to overcome the commitment problem, but also to achieve profits beyond that of a static monopolist by practicing intertemporal price discrimination. Bagnoli et al. (1989) show that a monopolist can perfectly price discriminate – i.e. change the price over time such that consumers self-select and buy at prices equal to their reservation price – if the number of consumers is finite, the time horizon is infinite and trading occurs in discrete time. Dudey (1996) investigates the same question for non-durable goods monopolies and finds that a monopolist can perfectly price discriminate if infinitely patient consumers have demand for more than one unit of the good.1 Standard intuition suggests that in an environment with multiple firms competing in prices the law of one price will prevail. Firms should not be able to price discriminate regardless of discontinuities on the demand side. Competing firms are expected to end up there where the Coase Conjecture puts the monopolist—at sales prices equal to marginal cost. Casual observation of the author, who regularly flies between major Australian cities, indicates that this might not be true. Despite the competition between two to three airlines on the same route, intertemporal price discrimination seems to be the rule. This paper explores reasons why intertemporal price discrimination sometimes can coexist with competition and why monopolists sometimes are not able to sustain intertemporal price discrimination, even in the most favourable environment where theory predicts profits above those earned in a static monopoly. Some econometric evidence suggests that the extent of price dispersion in markets for non-durable goods – such as airline tickets and perishable commodities – does not negatively depend on the competitiveness of the market, as basic intuition suggests. Stavins (2001) and Borenstein and Rose (1994) even find that competition increases price dispersion. There are a variety of possible reasons for the persistence of intertemporal price dispersion in competitive markets. Candidates offered in the literature are repeated interaction, demand uncertainty, capacity constraints or costly buyer search. Price dispersion can be discriminatory, i.e. customers with different preferences pay different prices, or the consequence of real cost differences. These two cases are hard to disentangle, as anti-trust cases have repeatedly shown. For example, airline tickets that are purchased well in advance are usually cheaper than tickets that are bought close to the departure date. This can be interpreted as intertemporal price discrimination, as holiday makers with low reservation prices purchase in advance, while business travellers with high reservation prices buy close to the time of departure. Alternatively, it can also be argued that the different ticket prices just reflect real cost differences. Lott and Roberts (1991) argue that the higher price for late bookers includes the opportunity costs arising from the airline’s risk of having empty seats. They also argue that price dispersion cannot be discriminatory, since competition and low search cost prevent pricing above marginal cost. Can we therefore conclude that all intertemporal price dispersion in markets for non-durables with more than one firm, can only be due to cost differences? A growing body of theoretical literature suggests that this conclusion is not valid, as it shows that under certain circumstances intertemporal price discrimination is possible, even in competitive non-durables markets.2 Some kind of uncertainty, capacity constraints and/or repeated interaction are the necessary ingredients for models where intertemporal price discrimination for non-durables prevails under competition.3 Gale (1993) shows in a model, where consumers ex ante do not know which variety of a good they prefer, that the price dispersion between advance-purchase prices and spot prices is higher in a duopoly than in a monopoly. The results are driven by the consumers’ uncertainty, which implies that goods are ex ante homogeneous, but become differentiated once the consumers have learned their preferences. So, ex post there is some scope for price discrimination. Dana (1998) shows that market segregation of low and high-valuation customers can be achieved by competitive firms if capacity is costly and there is some correlation between individual valuations and demand uncertainty. In a model with durable goods Sobel (1984) shows that price cycles (high prices with periodical discounts) are an equilibrium even when there are multiple firms selling a homogenous good. The discounts are used to get low-valuation customers to buy and firms make supernormal profits. The main reason why the Bertrand logic of undercutting not necessarily applies in durable goods markets is that repeated interaction gives rise to trigger strategies which support an equilibrium with price cycles. This logic can easily be extended to firms that compete repeatedly in subsequent non-durable goods markets. Burdett and Judd (1983) and Stahl (1989) show that price dispersion can prevail under competition if consumers’ costly search creates some demand uncertainty. In this paper we test experimentally whether intertemporal price discrimination really disappears with competition when we use a very simple framework that does not exhibit any of the characteristics that were used to theoretically explain price discrimination. Put differently, are there any behavioural reasons why we might observe intertemporal price discrimination even when the competitive environment appears to favour the law of one price? Alternatively, are there potential reasons why we should not observe price discrimination even with a monopolist seller operating in an environment where theory would predict it? A potential behavioural factor that mitigates the pressure of competition towards a stable sales price is the limited depth of iteration exhibited by consumers. To see this, put yourself in the shoes of a consumer who wants to purchase an airline ticket. Assume for instance that you know that there are more seats than potential travellers. You check the ticket prices of the different operators continuously on the web. For the Bertrand logic to work, i.e. price undercutting down to marginal cost without any sales at prices above marginal cost, consumers have to anticipate and to be sure that firms will eventually undercut each other. Consumers also have to be sure that the other customers also know this and will act accordingly. For certain conjectures about the behaviour of the other market participants, it becomes optimal for a customer to buy in advance and at a price above marginal cost. On the other hand, fairness considerations could explain why a monopolist loses some of his price-discrimination power. Suppose your plan to fly develops at short notice. From experience you know that the price will be quite high and would have been much lower if you had booked earlier. If you are spiteful about the unfairness of the monopolist trying to extract a very high proportion of the surplus just because you decided spontaneously to fly, then your reservation price given the pricing policy of the airline might be lower than your valuation of the flight. You find the pricing of the monopolist unfair and are willing to forgo the benefit of travelling rather than to be exploited by the airline. You might call the price “ridiculous” and abstain from traveling even though the price is below your valuation. Preferences like these limit the price-discrimination power of a firm regardless of market power. We experimentally implement two typical market environments where theory predicts that in equilibrium a monopolist can price discriminate, while duopolists cannot and compare the outcomes for monopolies and duopolies. We call these environments last-minute discounting and early-bird discounting. In both cases, the typical Bertrand logic applies for markets with more than one firm and price discrimination should not be observed in equilibrium. In the last-minute discounting scenario the intuition as to why a monopolist can price discriminate is similar to that in Dudey (1996). A market where posted prices can be revised many times before the non-durable good is delivered (or perishes) allows a monopolist to sell at (or just below) the monopoly price initially, in order to revise the price downwards later on. Consumers, who are heterogenous in their valuation, anticipate that the price will never fall below the monopoly price if nobody buys early. So at least one consumer with a high valuation is willing to accept early. 4 Then once the first high-valuation customers are out of the market the monopolist can charge the remaining low-valuation customers a lower profit maximising price. Such a pricing strategy is profitable, since consumers with valuations below the static monopoly price now generate revenue, while the consumers with higher valuations self-select and buy at the static monopoly price. Our experiments reveal that in the last-minute scenario duopolists – as expected – have difficulties to sustain intertemporal price discrimination. Surprisingly, duopoly markets show some intertemporal price discrimination in early trading periods, which disappears in later markets. Monopolists achieve some price discrimination in the last-minute scenario throughout the whole experiment. The price discrimination is far from perfect though. The differences in selling prices between monopolies and duopolies is much smaller than expected, which leads to moderate differences (compared to the theoretical prediction) in consumer and producer surplus. The second scenario is the commonly observed early-bird discounting. When customers with lower valuations for the good start searching earlier for cheap prices than consumers with higher valuations, then it is possible to sell to these customers at early-bird discount prices, while the high valuation customers who enter later can be charged higher prices. The main objective of the monopolist is to get the low-valuation customers out of the market before the high-valuation customers arrive. The low-valuation customers accept early, as they anticipate that the prices will go up over time. We observe that the experimental monopolists have difficulties to price discriminate in this setting. Surprisingly, the duopolists are able to price discriminate. Comparing the frequency of successful price discrimination shows that duopolists are more successful, but monopolists achieved higher prices than duopolists, whenever they were able to price discriminate. The intuition behind this seemingly paradoxical result is the following. Competition reduces the initially offered prices and therefore increases the chance that the low-valuation customers accept early, which is required for intertemporal price discrimination. The behavioural regularity that drives most of our results is that consumers readily accept prices well above the equilibrium price in markets with competition, while they reject equilibrium offers in the monopolies. The observation that consumers regularly refuse to purchase at high prices, even if they have to sacrifice some net benefit to do so, indicates that fairness considerations play a role. This behaviour occurs almost exclusively in monopolies, which leads to considerable welfare losses compared to markets with two firms. Additionally, we find some evidence that consumers accept prices in early trading periods even if it is likely that refusal to accept early would lead to lower prices later on. As payoffs in our experiments are not discounted this hints at irrational expectations and/or bounded rationality. The reminder of the paper is organised as follows. Section 2 summarises the results of existing experimental work related to our study. Sections 3 and 4 lay out the two market environments and characterise the equilibria for monopolies and duopolies. Section 5 briefly discusses the crucial behavioural assumptions necessary for the extremely different equilibrium predictions for duopolies and monopolies, while Section 6 describes the experiment. In Section 7, the experimental results are presented. Section 8 concludes.
نتیجه گیری انگلیسی
In this paper we investigated the effect of the introduction of competition on market dynamics in settings where theory predicts that monopolists can price discriminate by changing posted prices over time, while duopolists cannot. We experimentally implemented two scenarios. In the early-bird scenario, the customer with the lower valuation for the good enters before the high-valuation customer. Price discrimination occurs when the low-valuation customer buys before the high-valuation customer enters. In the last-minute scenario both customers enter at the same time, while the valuations are so different that price discrimination may occur when the high-valuation customer is lured into accepting early. We found that – in contrast to the theoretical prediction – duopolists manage to price discriminate in early markets in both treatments. In the early-bird scenario price discrimination is sustained in the latter markets but disappears in the last-minute environment. Monopolists have more difficulties achieving price discrimination than theory predicts. In the last five markets in the early-bird scenario monopolists are not able to price discriminate more frequently than in a benchmark case where prices and acceptance decisions are purely random. Additionally, in the early bird-scenario duopolists are even more successful at achieving price discrimination than the monopolists throughout our experiment. This result is reversed in the last-minute scenario. There, the monopolists have the edge over the duopolists with regard to price discrimination. These results are surprising only at a first glance. In the early-bird setting successful price discrimination requires that the low-valuation customer accepts before the high-valuation customer. The reluctance of low-valuation customers to purchase at high prices makes duopolists more successful, as there competition leads to lower initial prices. In the last-minute scenario on the other hand, successful price discrimination requires that the high-valuation customer accepts earlier than the low-valuation customer. There, the higher initial prices set by a monopolist are helpful, as the high valuation customers perceive the same prices as fairer than low-valuation customers and therefore accept earlier. Under competition the prices are already low in the first stages of a market, which leads to early acceptance of both types of customers. This prevents duopolists from price discriminating in the last-minute scenario. Competition enhances efficiency in the experimental markets. Welfare in the monopoly treatments is substantially lower than predicted, as buyers regularly deviate from the theoretical prediction by rejecting profitable offers in the final stage of a market. This only happens extremely rarely (only twice in 220 markets) in the competition treatments. In conclusion we find that the promotion of competition is beneficial in markets where intertemporal price discrimination is possible. It substantially increases consumer surplus. The beneficial effect on consumers surplus is by far not as strong as theory predicts though. The same is true for the profits. Competition has a much less severe effect on profits than expected. The monopolists had much less pricing power than predicted by standard theory, while the duopolists – also in contrast to the prediction – were able to retain at least some pricing power. The most striking advantage of competition is the increase in total welfare. In a situation where demand is perfectly inelastic, we would not expect competition to have any positive influence on welfare, while we actually observe a strong positive effect. Somewhat lower prices significantly reduce the number of disgruntled customers, who boycott the sellers for reasons of inequality aversion, spite or negative reciprocity. This (unexpected) welfare bonus renders competition a valuable force for achieving better market outcomes. Regarding the distributional impacts we found that competition not necessarily eradicates discriminatory price dispersion though.