; ; ; "ActiveFedora::Aggregation::ListSource" . a , ; "Nonlinear Pricing in Village Economies"; ; "jannelle.ruswick@mpls.frb.org"; "Pastorino, Elena", "Attanasio, Orazio P."; "Federal Reserve Bank of Minneapolis"; "Structural estimation", "Cash transfers", "Nonlinear pricing", "Budget constraints"; "D42 - Market Structure, Pricing, and Design: Monopoly", "D43 - Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection", "O22 - Project Analysis", "O13 - Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products", "O12 - Microeconomic Analyses of Economic Development", "D82 - Asymmetric and Private Information; Mechanism Design", "I38 - Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs"; "This paper examines the price of basic staples in rural Mexico. We document that nonlinear pricing in the form of quantity discounts is common, that quantity discounts are sizable for typical staples, and that the well-known conditional cash transfer program Progresa has significantly increased quantity discounts, although the program, as documented in previous studies, has not affected on average unit prices. To account for these patterns, we propose a model of price discrimination that nests those of Maskin and Riley (1984) and Jullien (2000), in which consumers differ in their tastes and, because of subsistence constraints, in their ability to pay for a good. We show that under mild conditions, a model in which consumers face heterogeneous subsistence or budget constraints is equivalent to one in which consumers have access to heterogeneous outside options. We rely on known results (Jullien (2000)) to characterize the equilibrium price schedule, which is nonlinear in quantity. We analyze the effect of nonlinear pricing on market participation as well as the impact of a market-wide transfer, analogous to the Progresa one, when consumers are differentially constrained. We show that the model is structurally identified from data on prices and quantities from a single market under common assumptions. We estimate the model using data from municipalities and localities in Mexico on three commonly consumed commodities. Interestingly, we find that nonlinear pricing is beneficial to a large number of households, including those consuming small quantities, relative to linear pricing mostly because of the higher degree of market participation that nonlinear pricing induces. We also show that the Progresa transfer has affected the slopes of the price schedules of the three commodities we study, which have become steeper as consistent with our model, leading to an increase in the intensity of price discrimination. Finally, we show that a reduced form of our model, in which the size of quantity discounts depends on the hazard rate of the distribution of quantities purchased in a village, accounts for the shift in price schedules induced by the program."^^; "2019-08-26"; "2020-03-16T20:22:06.636320313+00:00"^^; "https://doi.org/10.21034/iwp.23"; ; "https://creativecommons.org/licenses/by-nc/4.0/"; "2020-03-27T14:53:57.453295384+00:00"^^; "https://creativecommons.org/licenses/by-nc/4.0/"; "Research Paper"; "40", "594"; "Institute working paper (Federal Reserve Bank of Minneapolis. Opportunity and Inclusive Growth Institute)"; "023"; "Nonlinear pricing", "Structural estimation", "Cash transfers", "Budget constraints"; ; ; ; ; "Federal Reserve Bank of Minneapolis. Opportunity and Inclusive Growth Institute"; "Published in _Econometrica_ (vol. 88, no. 1, January 2020, pp. 207-263), https://doi.org/10.3982/ECTA13918."^^; ; "Publication" . ; .