This paper proposes a new methodology for analyzing nonlinear pricing data. We establish identification of the model primitives with a known tariff and characterize the model restrictions on observables. We propose a quantile-based nonparametric estimator that achieves consistency at the parametric rate. We introduce unobserved product heterogeneity with an unknown tariff and show how our identification and estimation results extend. A Monte Carlo study analyzes the robustness of our methodology to menus of two-part tariffs. Analysis of cellular service data assesses the performance of various pricing strategies. We discuss extensions to network effects, multiproduct firms, bundling, differentiated products, and oligopolies.
ASJC Scopus subject areas
- Economics and Econometrics