National pricing with local quality competition

• Autor(a) principal: Gabrielsen, Tommy Staahl
• Data de Publicação: 2020
• Outros Autores: Johansen, Bjørn Olav, Straume, Odd Rune
• Tipo de documento: Artigo
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: https://hdl.handle.net/1822/68307
• topic: National pricing; local pricing; retail chains; price and quality competition

We study the incentives of national retail chains to adopt national (uniform) prices across local markets that differ in size and competition intensity. In addition to price, the chains may also compete along a quality dimension, and quality is always set locally. We show that absent quality competition, the chains will never use national pricing. However, if quality competition is sufficiently strong there exist equilibria where at least one of the chains adopts national pricing. We also identify cases in which national pricing benefits (harms) all consumers, even in markets where such a pricing strategy leads to higher (lower) prices.