Wednesday, December 26, 2012
Posted by D. Daniel Sokol
Haizhen Lin (Department of Business Economics and Public Policy, Indiana University Kelley School of Business) and Yijia Wang (NERA Economic Consulting) analyze Competition and Price Discrimination in the Parking Garage Industry.
ABSTRACT: We study the relationship between competition and price discrimination through an empirical examination of hourly price schedules in the parking garage industry. We find that the degree of price schedule curvature decreases with competition, implying a greater proportionate drop in low-end prices than in high-end prices when competition intensifies. We provide an explanation for our findings using differences in search behaviors between short- and long-term customers.