Discriminatory prices and the prisoner dilemma problem
- 118 Downloads
We ask whether the tendency of Hotelling duopolists to choose uniform pricing (discriminatory pricing) when the pricing policy is chosen before (after) the location is robust to the case of imperfect or third-degree price discrimination. By using a general framework encompassing both perfect and imperfect price discrimination for any degree of imperfectness, we show that both firms choose uniform pricing when the pricing policy is chosen before the location for any degree of imperfectness of price discrimination. When the pricing policy is chosen after the location and price discrimination is precise enough both firms choose price discrimination; if price discrimination is highly imprecise, an equilibrium exists where both firms commit not to price discriminate.
JEL ClassificationD43 L11
Unable to display preview. Download preview PDF.
- Thisse JF, Vives X (1988) On the strategic choice of spatial price policy. Am Econ Rev 78: 122–137Google Scholar
- Tirole J (1988) The theory of industrial organization. MIT Press, CambridgeGoogle Scholar
- Ulph D, Vulkan N (2000) Electronic commerce and competitive first-degree price discrimination, wp. Economic and Social Research Council (ESRC) Centre, LondonGoogle Scholar