Document Type

Discussion Paper

Publication Date


CFDP Number


CFDP Revision Date

September 2018, March 2019

CFDP Pages


Journal of Economic Literature (JEL) Code(s)

D21, D43, L13


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.

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Economics Commons