ZONING UNDER SPATIAL PRICE DISCRIMINATION

This paper investigates zoning in a duopoly model of spatial price discrimination. We find that the zone in which the firms are not allowed to locate depends on the bias of the regulator. A bias toward firms is deduced when locations around the central area are forbidden, and a bias toward consumers exists when firms are only allowed to locate at places around the central area. The design of the zoned area guarantees that firms locate optimally and works under simultaneous or sequential choice of locations by the two firms. (JEL L13, R38)     

REVELATION MECHANISMS AND ALLOCATIVE EFFICIENCY

We show that revelation mechanisms affect owners' valuations of the assets they own and that different mechanisms provide owners with the incentive to reveal—truthfully—different valuations. Self‐assessment of property with compulsory sale at the self‐assessed price is the only known mechanism that promotes allocative efficiency by providing efficient incentives for transferring property to those who value it most. We introduce two modifications of the standard self‐assessment mechanism that maintain full incentives to invest and raise as much public revenue as can be raised efficiently. (JEL D61, D82, H21, K11)     

TIE-IN SALES AND PRICE DISCRIMINATION

This paper analyzes a class of contracts between buyers and sellers which specifies that the purchase of one good cannot be effectuated unless a second good is also purchased. The economic forces resulting from a tie-in are shown to be influenced by factors such as depreciation of the tying good, the sales policy of the firm and the discount rate. Price discrimination, the traditional hypothesis for this tie-in, is seen to make sense only when these factors align themselves in particular ways although an alternative hypothesis, risk reduction, is unaffected by these factors. The price-discrimination hypothesis, therefore, loses much of its appeal, relative to the alternative.     

ASYMMETRIC ADJUSTMENTS OF PRICE AND OUTPUT

Classical theories predict rapid price adjustments, which are observed in inflationary episodes; Keynesian theories of sticky prices predict sluggish price responses, which are observed in contractions. We attempt to reconcile these observations in a model with asymmetries in producer price and output adjustments. Analysis of SIC two-digit industry data indicates production frequently exhibits negative asymmetry-shortfalls from trend are larger than positive deviations-whereas price often displays positive avmmetry. Evidence supporting two rational motives for asymmetric pricing is presented, but causal interactions between output and price asymmetries are not resolved. (JEL E3)     

RATIONING BY SELLER'S PREFERENCE AND PACIAL PRICE DISCRIMINATION

This paper investigates the behavior of a seller who has a preference for a certain group of customers. The seller maintains stable prices over time and supplements price rationing with a nonprice rationing. In this situation the preferred buyers would have priority over nonpreferred buyers in purchasing the commodity, and if the latter purchase the commodity they may be paying higher prices. It is proposed here that the premium paid by the nonpreferred buyers is a necessary bribe to induce the seller to forego his search for the preferred buyers.     

AN EMPIRICAL MODEL OF PRICE AND OUTPUT BEHAVIOR

This paper proposes a model of short-run price and output behavior and undertakes an initial empirical investigation of the model with data from the manufacturing sector of the U.S. Economy. The model provides a relatively precise specification of the various factors that influence prices and output, and joint maximum likelihood techniques are used to estimate the parameters of the model. The empirical results support the proposition that demand-oriented forces primarily influence output while cost-push forces primarily influence prices and indicate that real interest rates affect both prices and output.     

THE ALLOCATIVE EFFECT OF NON-BINDING PRICE CONTROLS*

This paper shows that the imposition of non-binding price controls affects the allocation of resources. Given uncertainty the imposition of such controls will affect expectations of future prices and therefore current investment and output decisions. Non-binding ceilings (floors) will cause future market clearing prices to be higher (lower). More surprisingly they may cause a current period shortage (surplus). The effects of threatened (stochastic) price and profit controls are also examined.     

PRICE DISCRIMINATION IN RELATED MARKETS

The Pigou-Robinson pricing rule for third degree monopolistic price discrimination states that price ratios vary inversely with ratios of direct price elasticities of demand. The rule holds when markets are sealed, and cross price elasticities of demand are zero. We show how the rule can fail when imperfect sealing permits leakage. We also develop a general discriminatory pricing rule that holds when leakage causes market demands to be related. The general pricing rule is based on all direct price elasticities of demand, all cross price elasticities of demand, and the size distribution of the markets     

PRICE DIFFERENTIALS and PRICE DISCRIMINATION: REPLY and EXTENSIONS

Precise definitions of price discrimination are analyzed in this paper as part of a reply to one of my earlier papers on a related topic. The main conclusion is that the two definitions used most frequently are appropriate only in special circumstances not recognized previously. No definition exists to cover all real-world situations.     

MIXED OLIGOPOLY, SEQUENTIAL ENTRY, AND SPATIAL PRICE DISCRIMINATION

This paper is the first to examine the welfare consequences of a public firm in a traditional model of spatial price discrimination. It demonstrates that when a private firm acts as a Stackelberg location leader, the presence of a public firm always improves welfare. Moreover, when three firms locate sequentially, the presence of a public firm improves social welfare unless it locates last. Thus, despite examining a variety of location timings, including simultaneous location, privatization never improves welfare and usually harms welfare. This conclusion differs from several currently in the literature in which privatization often improves welfare. ( JEL L13, L32, L33, L52)     

QUALITY DIFFERENCES,THIRD‐DEGREE PRICE DISCRIMINATION,AND WELFARE

We propose a model with two markets to analyze the welfare implications of price discrimination with quality differences. In each market a local firm that operates in that market only competes against a global firm that operates in both markets. Local firms produce higher‐quality goods than the global firm. If the quality levels of the local firms' products are the same, price discrimination is never welfare‐decreasing. If they differ, discrimination is welfare‐increasing if quantity increases. Because of a positive allocation effect of price discrimination, there are parameter values such that welfare increases while total output decreases with price discrimination. (JEL D43, D60)