Working Paper: CEPR ID: DP7315
Authors: Kathryn Graddy; George Hall
Abstract: We estimate a dynamic profit-maximization model of a fish wholesaler who can observe consumer characteristics, set individual prices, and thus engage in third-degree price discrimination. Simulated prices and quantities from the model exhibit the key features observed in a set of high quality transaction-level data on fish sales collected at the Fulton fish market. The model?s predictions are then compared to the case in which the dealer must post a single price to all customers. We find the cost to the dealer of posting a uniform price to be extremely small.
Keywords: dynamic programming; fish; indirect inference; price discrimination; yield management
JEL Codes: C15; D21; D4; L1; L81
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Customer type (Asian) (R20) | Pricing (lower prices) (D49) |
| Customer type (white) (Y90) | Pricing (higher prices) (D49) |
| Customer type (Asian) (R20) | Price elasticity (higher) (D11) |
| Price discrimination (D40) | Revenue (modest effect) (H27) |
| Uniform pricing (D41) | Average prices paid (shift) (P22) |