Essays on pricing strategies in markets with heterogeneous consumers

Existing game theoretic models of pricing strategies typically assume that consumers have identical reservation prices and abstract from the issue of vertical or channel structure. My dissertation shows that these assumptions and abstractions are not innocuous.; Among other things, my first essay shows that oligopolistic price competition among manufacturers leads to a subgame perfect Nash equilibrium in which manufacturers randomly discount their wholesale prices. This, in turn, induces a dominant (monopoly) retailer to either promote the brand with the lowest wholesale price or promote neither brand (if wholesale prices are sufficiently high).; My second essay shows that when the difference in consumer reservation prices is small, retail sales promotion is not only optimal but benefits a dominant (monopoly) manufacturer as well as oligopoly retailers.; My third essay shows that coupons benefit a dominant (monopoly) manufacturer but "harm" oligopoly retailers.; I also show that these predictions are broadly consistent with actual pricing strategies used by firms in conventional as well as online markets.