SciELO - Scientific Electronic Library Online

 
vol.73 issue4A Time Series Analysis of Household Income Inequality in Brazil From 1977 to 2013Impactos Macroeconômicos do Choque Fiscal de 2015: A Regularização de Despesas Públicas Não Contabilizadas author indexsubject indexarticles search
Home Pagealphabetic serial listing  

Services on Demand

Journal

Article

Indicators

Related links

Share


Revista Brasileira de Economia

Print version ISSN 0034-7140On-line version ISSN 1806-9134

Abstract

CASTILHO, Rafael de Braga. Minimum Initial Application and Price Discrimination in the Fund Market. Rev. Bras. Econ. [online]. 2019, vol.73, n.4, pp.471-487.  Epub Jan 27, 2020. ISSN 1806-9134.  https://doi.org/10.5935/0034-7140.20190022.

Banks offer multiple funds that vary in its characteristics. Usually funds with larger minimum initial application have lower administration fees, which could be due to lower costs. In this paper I analyze the extent to which this negative correlation can be explained by costs or rather reflects banks attempt to practice second-degree price discrimination. In order to do this I estimate a structural model that allows to recover funds marginal cost and therefore, to indicate how much of the fee variation is due to cost differences. Results suggest that banks use the minimum initial application as a way to price discriminate. Counterfactual exercises assuming that banks can neither charge multiple fees nor minimum initial applications indicate that consumers welfare decrease in most cases.

Keywords : Discrete choice; differentiated products; price discrimination; random coefficients; fixed income fund.

        · text in English     · English ( pdf )