Nikita Roketskiy (University College London)

Stores versus storage (joint with V.Bhaskar)

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. We show that in a stationary environment the sellers offer two conceptually different kinds of products: the ones that are meant for immediate consumption and the ones that are meant for stockpiling. The latter ones are sold using two part tarif and the former — linear pricing.