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The Annals of Regional Science

, Volume 46, Issue 2, pp 397–416 | Cite as

Discriminatory prices and the prisoner dilemma problem

  • Stefano ColomboEmail author
Original Paper

Abstract

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 Classification

D43 L11 

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Copyright information

© Springer-Verlag 2009

Authors and Affiliations

  1. 1.Catholic University of MilanMilanoItaly

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