Nikita Roketskiy, UCL

"Stores versus Storage"

Abstract

This paper studies equilibrium nonlinear pricing of storable goods in the absence of sellers’ commitment to future offers. We show that, in the model with identical consumers, the consumers retain surplus by diverging in their choices of consumption and inventory levels, thus creating an endogenous heterogeneity in willingness to pay. The sellers respond to that by offering rich screening menus that feature per unit price dispersion. Equilibrium menus feature distinct clusters of items: some are meant for immediate consumption and some are meant for stockpiling. Due to storage the consumers can engage in intertemporal arbitrage which significantly limits the sellers’ ability to extract surplus via second-degree price discrimination.

(Joint with V. Bhaskar, UT Austin)

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