Multiproduct Pricing

Multi professionalfessional personduct Pricing in Oligopoly? Sandro Shelegia† Department of economics University of Vienna April 18, 2011 hook This paper proposes a two-good model of price competition where well-nigh(prenominal) consumers twaddle all the shops and new(prenominal)s visit only virtuoso. We ?nd that the randomness frictions jot to price dispersion. When the two goods atomic number 18 complements their prices pull up stakes be negatively correlated so if one of them is priced mellowed, past the other one is at a discount. This ?nding is supported by some empirical enjoin which suggests that simultaneous price discounts of complements ar infrequent. If the goods are substitutes, then their prices will be uncorrelated, potentially rationalizing the neediness of evidence on their co-price. When selling complements, retailers earn higher pro?ts than in the one-good model by discriminating consumers through taxing captives with high overall price tag and attracting shoppers by pricing one of the goods aggressively. Due to this, bundling practices are shown to be deadly to retailers pro?ts. JEL classi?cation: D83, L11, L13. Keywords: Multiproduct Competition, Complements, Substitutes.

I am grateful to Antonio Cabrales and Andreu Mas-Colell for careful supervision, Karl Schlag for genuinely helpful discussions, Sjaak Hurkens, Maarten Janssen, Xavier Vivies, and to participants of the Simposio de Analisis Economico, Zaragoza 2008, European Winter Meeting of Econometric Society, Cambridge 2008, empurpled Economic Society Fourth PhD Presentation Meeting, London 200 9, shop in Industrial Organization, Lecce 20! 09, EARIE Annual Meeting, Ljubljana 2009, and invited seminars at the University of Vienna, University of Toronto, DIW Berlin, University of Maastricht, Norwegian naturalise of political economy and Business, Queen Mary University London, for their comments. Any be errors are my own. † electronic mail:sandro.shelegia@univie.ac.at; Tel.: +43 1 4277 37466; facsimile machine: +43 1 4277 37498; reference work: BWZ 232, Br¨nner Straße 72, 1210 Vienna, Austria. u ? 1...If you want to get a blanket(a) essay, order it on our website: OrderCustomPaper.com

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