Seminar – Competition in a Differentiated Product Market with Individualised Pricing: The Case of the UK Brick Industry

Professor Howard Smith, Oxford University

In many competitive markets the seller sells the product at an individualised price specific to the buyer. This is a particular feature of markets where buyers preferences are well known to the sellers. This study focuses on price determination in a market where products are differentiated by geographic location as well as by product characteristics. Using a data set of transactions from the UK brick industry, the study estimates a model with individualised prices. We analyse the effect of bargaining skill, location, and transaction size on prices. In counterfactual analysis, the research measures the welfare impact of prohibiting individualised price discrimination, and the study analyses the effects of mergers when there is individualised pricing.

Speaker bio

Howard Smith is an Associate Professor in the Department of Economics at Oxford University. He is interested in models of industry behaviour in oligopoly product markets, and their econometric estimation, with application to competition policy issues.