Arbeitspapier

When the Baby Cries at Night: Inelastic Buyers in Non-Competitive Markets

We investigate empirically how sellers react to changes in the population of their consumers, identifying the effects of demand composition and demand size with limited information on costs. We show how pharmacists in Italy selectively increase the price of some products when they observe in their cities an exogenous influx of parents of newborns, conceivably less elastic buyers as compared with other more experienced and less pressed consumers. Exploiting population based laws that fix the number of pharmacies in a city, we use RDD to measure the effect of competition on sellers' ability to extract surplus from less elastic buyers.

Language
Englisch

Bibliographic citation
Series: IZA Discussion Papers ; No. 8490

Classification
Wirtschaft
Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
Oligopoly and Other Imperfect Markets
Subject
demand elasticity
consumer's information
price competition
pharmacies
regression discontinuity

Event
Geistige Schöpfung
(who)
Calzolari, Giacomo
Ichino, Andrea
Manaresi, Francesco
Nellas, Viki
Event
Veröffentlichung
(who)
Institute for the Study of Labor (IZA)
(where)
Bonn
(when)
2014

Handle
Last update
10.03.2025, 11:42 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Calzolari, Giacomo
  • Ichino, Andrea
  • Manaresi, Francesco
  • Nellas, Viki
  • Institute for the Study of Labor (IZA)

Time of origin

  • 2014

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