Datta, Debabrata and Roy, Jaideep (2008) Sales technology and price leadership. Manchester School, 76 (2). pp. 180-195. ISSN 1463-6786Full text not available from this repository.
Two firms sell a homogeneous product to two buyers who differ significantly in their valuation of the good and are allowed to charge (possibly) multiple two-part tariffs. Firms decide upon optimal prices and the choice of sales technologies which help acquire revenues from nonlinear prices. There is a subgame-perfect equilibrium where firms choose different sales technologies and the firm with an advanced sales technology emerges to be a price leader, charging a two-part tariff and selling only to the low-valuation buyers. Consequently, the firm with the less advanced sales technology follows, charges only a fixed fee and serves the high-valuation buyers and always earns strictly higher profits than its leader. Social surplus may deteriorate with competition.
|Journal or Publication Title:||Manchester School|
|Departments:||Lancaster University Management School > Economics|
|Deposited On:||11 Jul 2011 19:22|
|Last Modified:||28 Oct 2016 02:33|
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