Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

A Member of the Law Professor Blogs Network

Wednesday, January 26, 2011

Automobile engine variants and price discrimination

Posted by D. Daniel Sokol

Øyvind Thomassen (Katholieke Universiteit Leuven) investigates Automobile engine variants and price discrimination.

ABSTRACT: Using a structural model of demand for automobile engine variants, this paper finds that there is second-degree price discrimination: markups increase with engine size. Still, average markups are lower than when models have just one engine. The paper develops the first empirical demand framework suitable for markets with variants. There is an unobserved product characteristic and a consumer-specific logit term for classes of products, but both are fixed across variants. Fixed effects control for unobservables. The literature’s assumption of orthogonality between unobserved and observed product characteristics is not needed.

http://lawprofessors.typepad.com/antitrustprof_blog/2011/01/automobile-engine-variants-and-price-discrimination.html

| Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef0148c711897c970c

Listed below are links to weblogs that reference Automobile engine variants and price discrimination:

Comments

Post a comment