Pricing-to-Market: Price Discrimination or Product Differentiation?

Topics:
Competitive Pricing,
Pricing Strategy
Tags:
Arbitrage,
Financial Services,
Pseudo PTM,
Scenario,
University Of Massachusetts
Source:
University of Massachusetts

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Overview: This paper examines the extent to which a false detection of Pricing-To-Market (pseudo PTM) arises from the use of unit value data. To do so, the authors analyze two scenarios. Both scenarios involve a monopolist located in the home country producing a low- and high-quality variety of a good. In the first scenario, arbitrage prevails and the monopolist sets the same price to both markets for a given variety. In the second scenario, arbitrage is not possible and the monopolist price discriminates between the two markets. Pseudo PTM is found in both scenarios.

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Format: PDF | Size: 234KB | Date: Nov 2005 | Pages: 23


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