search query: @author Png, I. P. L. / total: 4
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Author: | Png, I. P. L. |
Title: | Most-favored-customer protection versus price discrimination over time |
Journal: | Journal of Political Economy
1991 : OCT, VOL. 99:5, p.1010-1028 |
Index terms: | CUSTOMERS CONSUMER PROTECTION PRICES DISCRIMINATION TIME DEMAND UNCERTAINTY |
Language: | eng |
Abstract: | How should a seller price capacity that has no salvage value to heterogeneous customers whose valuations are private information? There are two periods, and the seller cannot precommit to prices in the later period. One option is price discrimination: first price high, then discount later if excess capacity remains. By offering most-favoured-customer (MFC) protection, the seller can charge more in advance but will leave capacity unsold with positive probability. MFC protection is favoured when capacity is large. The seller leans toward price discrimination when customers are more uncertain about the degree of excess demand in the first period. |
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