Document Type
Discussion Paper
Publication Date
6-1-2018
CFDP Number
2136R3
CFDP Revision Date
September 2018, March 2019, February 2020
CFDP Pages
48
Journal of Economic Literature (JEL) Code(s)
D21, D43, L13
Abstract
This paper develops an oligopoly model in which firms first choose capacity and then compete in prices in a series of advance-purchase markets. We show that when the elasticity of demand falls across periods, 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 competing firms can profitably use inventory controls. Thus, although typically viewed as a tool to manage demand uncertainty, we show that inventory controls can also facilitate price discrimination in oligopoly.
Recommended Citation
Dana, James D. Jr. and Williams, Kevin R., "Intertemporal Price Discrimination in Sequential Quantity-Price Games" (2018). Cowles Foundation Discussion Papers. 132.
https://elischolar.library.yale.edu/cowles-discussion-paper-series/132