National pricing with local quality competition
Journal article, Peer reviewed
Published version

Åpne
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https://hdl.handle.net/11250/3060921Utgivelsesdato
2022Metadata
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- Department of Economics [304]
- Registrations from Cristin [11365]
Originalversjon
Journal of Economics and Management Strategy. 2022, 32 (1), 48-74. 10.1111/jems.12494Sammendrag
We study the incentives of national retail chains to adopt national (uniform) prices across local markets that differ in size and competition intensity. In addition to price, the chains may also compete along a quality dimension, and quality is always set locally. We show that absent quality competition, the chains will never use national pricing. However, if quality competition is sufficiently strong there exist equilibria where at least one of the chains adopts national pricing. We also identify cases in which national pricing benefits (harms) all consumers, even in markets where such a pricing strategy leads to higher (lower) prices.