Journal article
Price Discrimination by Negotiation: a Field Experiment in Retail Electricity*
DP Byrne, LA Martin, JS Nah
Quarterly Journal of Economics | Oxford University Press | Published : 2022
DOI: 10.1093/qje/qjac021
Abstract
We use a field experiment to study price discrimination in a market with price posting and negotiation. Motivated by concerns that low-income consumers do poorly in markets with privately negotiated prices, we built a call center staffed with actors armed with bargaining scripts to reveal negotiated prices and their determinants. Our actors implement sequential bargaining games under incomplete information in the field. By experimentally manipulating how information is revealed, we generate sequences of price offers that allow us to identify price discrimination in negotiations based on retailer perceptions of consumers' search and switching costs. We also document differences in price distr..
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Awarded by Australian Research Council
Funding Acknowledgements
We acknowledge support from the Australian Research Council (grant number LP140100099), Faculty of Business and Economics at the University of Melbourne, and the Samuel and June Hordern Endowment. This research is governed by Ethics Approval 1648136 from the University of Melbourne. We thank the editor and four anonymous referees for comments that significantly improved the article. We also received helpful feedback from Jason Allen, Ivan Balbuzanov, Aaron Barkley, Severin Borenstein, Jeremy Bornstein, Melisa Bubonya, Federico Ciliberto, Zan Fairweather, Matthew Freedman, Joseph Harrington, Paul Heidhues, Matthew Lewis, Simon Loertscher, Fiona Scott Morton, Helena Perrone, Scott Smalley, Michelle Sovinsky, Frank Strain, Steve Puller, Steve Tadelis, and seminar participants at NYU Stern, UVA, FTC, World Bank, DICE, U. Adelaide, EARIE 2020 (Bologna), 2019 MaCCI Summer Institute in Competition Policy, 2019 NBER Energy Markets Workshop, 2019 POWER Workshop, 2019 Melbourne IO Workshop, and 2017 Asia-Pacific IO Conference. Leslie thanks Leo Simon for his insights, support, mentorship, and friendship. All errors are our own.