When products are sold in advance, i.e. prior to consumption, consumers trade off an early, uninformed purchase at a low price against a late, informed purchase at a high price. This paper considers the effect of market structure on the prevalence of advance selling. We show that in an oligopolistic market with multi-product firms, advance selling (with its associated allocative inefficiency) is decreasing in market concentration when the consumers’ preference uncertainty is high but can be increasing when uncertainty is low.
# 16-020/VII (2016-03-31)
- Marc Möller, University of Bern, Switzerland; Makoto Watanabe, VU University Amsterdam, the Netherlands
- Competition, Price Discrimination, Individual Demand Uncertainty, Advance Purchase Discounts
- JEL codes:
- D43, D80, L13