Product Lines and Price Discrimination in Markets with Information Frictions

• 成果类型: Article
• 署名作者: Fabra, Natalia; Montero, Juan-Pablo
• 署名单位: Universidad Carlos III de Madrid; Centre for Economic Policy Research - UK; Pontificia Universidad Catolica de Chile
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2020.3941
• 发表日期: 2022
• 页码: 981-1001
• 关键词: approval; unless otherwise noted; For more information; contact permissions@informs; org; product strategy; pricing strategy; Second-degree price discrimination; search; Vertical differentiation; retail competition

摘要

A well-known principle in economics is that firms differentiate their product offerings in order to relax competition. However, in this paper we show that information frictions can invalidate this principle. We build a duopolistic competition model of seconddegree price discrimination with information frictions in which (i) an equilibrium always exists with overlapping product qualities, whereas (ii) an equilibrium with nonoverlapping product qualities exists only if both information frictions and the cost of providing high quality are sufficiently small. As a consequence, reasons other than an attempt to soften competition should explain why firms in some cases carry nonoverlapping product lines.