American Economic Review Vol. 103 No. 7 2013
Intertemporal Price Discrimination in Storable Goods Markets
Abstract
We study intertemporal price discrimination when consumers can store for future consumption needs. We offer a simple model of demand dynamics, which we estimate using market-level data. Optimal pricing involves temporary price reductions that enable sellers to discriminate between price sensitive consumers, who stockpile for future consumption, and less price-sensitive consumers, who do not stockpile. We empirically quantify the impact of intertemporal price discrimination on profits and welfare. We find that sales (i) capture 25–30 percent of the gap between non-discriminatory profits and (unattainable) third-degree price discrimination profits, (ii) increase total welfare, and (iii) have a modest impact on consumer welfare.
- DOI
- 10.1257/aer.103.7.2722
- Volume
- 103
- Issue
- 7
- Pages
- 2722-2751
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref