Multiproduct Pricing

Multi professionalfessional personduct Pricing in Oligopoly? Sandro Shelegia† Department of economics University of Vienna April 18, 2011 elevate This paper proposes a two-good model of price competition where well-nigh(prenominal) consumers chit-chat all the shops and new(prenominal)s visit only virtuoso. We ?nd that the randomness frictions train to price dispersion. When the two goods atomic number 18 complements their prices leave be negatively correlated so if one of them is priced mellowed, and then the other one is at a discount. This ?nding is supported by some empirical enjoin which suggests that simultaneous price discounts of complements argon infrequent. If the goods are substitutes, then their prices will be uncorrelated, potentially rationalizing the pretermit of evidence on their co-price. When selling complements, retailers earn higher pro?ts than in the one-good model by discriminating consumers through onerous captives with high overall price ta g and attracting shoppers by pricing one of the goods aggressively. Due to this, bundling practices are shown to be noxious 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 very(prenominal) 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, olympian Economic Society Fourth PhD Presentation Meetin g, London 2009, workshop in Industrial Orga! nization, Lecce 2009, EARIE Annual Meeting, Ljubljana 2009, and invited seminars at the University of Vienna, University of Toronto, DIW Berlin, University of Maastricht, Norwegian domesticate of political economy and Business, Queen Mary University London, for their comments. Any stay errors are my own. † electronic mail:sandro.shelegia@univie.ac.at; Tel.: +43 1 4277 37466; autotype: +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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