Intertemporal Price Discrimination in Sequential Quantity-Price Games

49 Pages Posted: 16 Oct 2018 Last revised: 2 Apr 2019

See all articles by James D. Dana Jr.

James D. Dana Jr.

Northeastern University

Kevin Williams

Yale School of Management; Yale University - Cowles Foundation

Multiple version iconThere are 3 versions of this paper

Date Written: March 27, 2019

Abstract

When firms first choose capacity and then compete on prices in a series of advance-purchase markets, we show that strong competitive forces prevent firms from utilizing intertemporal price discrimination. We then enrich the model by allowing firms to use inventory controls, or sales limits assigned to individual prices. We show that firms will choose to set inventory controls in order to engage in intertemporal price discrimination, but only if demand becomes more inelastic over time. Thus, although typically viewed as a tool to manage demand uncertainty, we show that inventory controls can also facilitate price discrimination in oligopoly.

Keywords: Capacity-pricing games, Intertemporal price discrimination, Oligopoly models, Inventory controls

JEL Classification: D21, D43, L13

Suggested Citation

Dana Jr., James D. and Williams, Kevin, Intertemporal Price Discrimination in Sequential Quantity-Price Games (March 27, 2019). Cowles Foundation Discussion Paper No. 2136R, Available at SSRN: https://ssrn.com/abstract=3254243 or http://dx.doi.org/10.2139/ssrn.3254243

James D. Dana Jr.

Northeastern University ( email )

220 B RP
Boston, MA 02115
United States

Kevin Williams (Contact Author)

Yale School of Management ( email )

493 College St
New Haven, CT CT 06520
United States

HOME PAGE: http://som.yale.edu

Yale University - Cowles Foundation ( email )

Box 208281
New Haven, CT 06520-8281
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
60
Abstract Views
539
Rank
417,254
PlumX Metrics