Structural analysis of nonlinear pricing

Yao Luo, Isabelle Perrigne, Quang Vuong

    Research output: Contribution to journalArticle

    Abstract

    This paper proposes a new methodology for analyzing nonlinear pricing data. We establish identification of the model primitives with a known tariff and characterize the model restrictions on observables. We propose a quantile-based nonparametric estimator that achieves consistency at the parametric rate. We introduce unobserved product heterogeneity with an unknown tariff and show how our identification and estimation results extend. A Monte Carlo study analyzes the robustness of our methodology to menus of two-part tariffs. Analysis of cellular service data assesses the performance of various pricing strategies. We discuss extensions to network effects, multiproduct firms, bundling, differentiated products, and oligopolies.

    Original languageEnglish (US)
    Pages (from-to)2523-2568
    Number of pages46
    JournalJournal of Political Economy
    Volume126
    Issue number6
    DOIs
    StatePublished - Dec 1 2018

    Fingerprint

    Tariffs
    Structural analysis
    Nonlinear pricing
    Methodology
    Multiproduct firms
    Pricing strategy
    Menu
    Oligopoly
    Estimator
    Two-part tariff
    Differentiated products
    Monte Carlo study
    Robustness
    Network effects
    Bundling
    Quantile

    ASJC Scopus subject areas

    • Economics and Econometrics

    Cite this

    Luo, Y., Perrigne, I., & Vuong, Q. (2018). Structural analysis of nonlinear pricing. Journal of Political Economy, 126(6), 2523-2568. https://doi.org/10.1086/699978

    Structural analysis of nonlinear pricing. / Luo, Yao; Perrigne, Isabelle; Vuong, Quang.

    In: Journal of Political Economy, Vol. 126, No. 6, 01.12.2018, p. 2523-2568.

    Research output: Contribution to journalArticle

    Luo, Y, Perrigne, I & Vuong, Q 2018, 'Structural analysis of nonlinear pricing', Journal of Political Economy, vol. 126, no. 6, pp. 2523-2568. https://doi.org/10.1086/699978
    Luo, Yao ; Perrigne, Isabelle ; Vuong, Quang. / Structural analysis of nonlinear pricing. In: Journal of Political Economy. 2018 ; Vol. 126, No. 6. pp. 2523-2568.
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