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Discussion Paper Details

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Title: A Dynamic Model of Price Discrimination and Inventory Management at the Fulton Fish Market

Author(s): Kathryn Graddy and George Hall

Publication Date: June 2009

Keyword(s): dynamic programming, fish, indirect inference, price discrimination and yield management

Programme Area(s): Industrial Organization

Abstract: We estimate a dynamic profit-maximization model of a fish wholesaler who can observe consumer characteristics, set individual prices, and thus engage in third-degree price discrimination. Simulated prices and quantities from the model exhibit the key features observed in a set of high quality transaction-level data on fish sales collected at the Fulton fish market. The model?s predictions are then compared to the case in which the dealer must post a single price to all customers. We find the cost to the dealer of posting a uniform price to be extremely small.

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Bibliographic Reference

Graddy, K and Hall, G. 2009. 'A Dynamic Model of Price Discrimination and Inventory Management at the Fulton Fish Market'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=7315