Marketing Papers

Document Type

Technical Report

Date of this Version

6-2016

Publication Source

Quantitative Marketing and Economics

Volume

14

Issue

2

Start Page

129

Last Page

155

DOI

10.1007/s11129-016-9168-3

Abstract

A rich theory literature predicts mixed strategies in posted prices due to standard price discrimination, search frictions, and various other rationales. While typically interpreted as implying occasional sales or price dispersion, online marketplaces enable a firm to truly use randomization as a tool in pricing, and so such behavior should be expected to arise in online settings. We investigate a case of mixed pricing across a large subset of products on a major e-commerce website. We first test for randomizing behavior, and then construct a model of price discrimination that would generate randomization as optimal behavior. We estimate the model and use it to assess pricing effects of a proposed merger in the industry.

Copyright/Permission Statement

This is a pre-publication version. The final publication is available at Springer via http://dx.doi.org/10.1007/s11129-016-9168-3

Keywords

price discrimination, online markets, merger analysis

Share

COinS
 

Date Posted: 15 June 2018

This document has been peer reviewed.