Sylvia Hristakeva (UCLA)

"Wholesale Price Discrimination when Product Selections are Endogenous"

Apr 25, 2018
from 04:10 PM to 05:30 PM

1131 Social Science and Humanities Gold room


Producers may choose to charge different wholesale prices to their retailers for three main reasons: (i) if retailers' marginal costs differ, (ii) if retailers face different market demands, or (iii) if retailers differ in their ability to extract better terms of trade. In mechanism (iii), a retailer may obtain favorable contracts by threatening to replace a product with a competitor's option. This project studies the welfare effects of imposing uniform contracts, when discrimination is driven by differences in retailers' outside options. First, I present a stylized theory example, which reveals that the welfare effect of uniform contracts is non-monotonic in the value of the replacement threat. Next, I analyze these effects empirically using data from the U.S. yogurt grocery market.




Seminar is open to the public, space is limited.