"Tacit bundling" among rivals: Limited-availability bargains to loss-averse consumers

"Tacit bundling" among rivals: Limited-availability bargains to loss-averse consumers

Wednesday, 25 October 2023, 15:45-17:00

Room: Α2-3

Presenter: Leontiou Anastasia, University of Vienna

This paper derives a stochastic discount strategy that encourages the joint consumption of two partial-substitute goods. The seller of the least-valuable product offers a limited-availability discount to consumers with reference-dependent preferences à la Kőszegi and Rabin (2006). A limited-availability discount introduces uncertainty and increases consumers' willingness to pay. Due to market competition, such stochastic pricing is effective only when it induces consumers to purchase both products. The other seller tacitly consents by choosing deterministic pricing; thus, a collusive outcome---which harms consumers' welfare---is achieved without any explicit coordination between the two sellers.

 

Zoom Link: https://zoom.us/j/97374751400?pwd=UjZ4cUVaSXZ2bnZUT1BNSVhySFlDQT09

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