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Please, do not place vending machines at the airport. A model with "locked-in" consumers and add-on pricing

Distefano, Rosaria
(2020)

Files

Rosaria_00151900_2020.pdf
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Rosaria_00151900_2020-Correctionpagedegarde.pdf
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Details

Supervisors
Maniquet, François
Faculty
Faculté des sciences économiques, sociales, politiques et de communication
Degree label
Master [120] en sciences économiques, orientation générale
Abstract
The thesis presents a simple consumption model under imperfect information, in which the competition for a primary good conceals an ex-post monopoly for the follow-on products. Firms lure consumers by pricing the primary product below cost and, then create a ``lock-in'' effect whereby some consumers are trapped into a monopoly market for the add-on. The main result is that, contrary to expectations, a policy intervention that makes competitive substitutes for add-on more accessible would make consumers worse off.