Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/312086 
Year of Publication: 
2024
Series/Report no.: 
CESifo Working Paper No. 11576
Publisher: 
CESifo GmbH, Munich
Abstract: 
We develop a model of spatial competition with two heterogeneous in their market access chains, choosing between third-degree price discrimination in their local markets (flexible pricing) and a unified chain-level price (uniform pricing). The markets are interconnected with each other via consumers who commute between them and can make purchases in locations where they do not reside. Our model supports an asymmetric equilibrium, in which the two pricing strategies co-exist: the larger chain uses uniform pricing, while the smaller chain employs flexible pricing. We also find that the chains never choose the pricing strategies that maximize the total consumer surplus.
Subjects: 
spatial competition
price discrimination
uniform pricing
commuters
JEL: 
D21
L11
L20
R32
Document Type: 
Working Paper
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