This article studies the use of different distribution channels asudan instrument of price discrimination in credence goods markets. Inudcredence goods markets, where consumers do not know which qualityudof the good or service they need, price discrimination proceedsudalong the dimension of quality of advice offered. High quality adviceudand appropriate treatment is provided to the most profitableudmarket segment only. Less profitable consumers are induced to demanduda treatment without a serious diagnosis. If consumers differudin the probabilities of needing different treatments some consumersudare potentially overtreated. By contrast, under heterogeneity in theudvaluations of a successful intervention some consumers are potentiallyudundertreated. Our results help to explain the casual observation thatudin the early phase of the IT industry only low quality equipment wasuddistributed via warehouse sellers while today it is quite common toudsee high quality equipment at discounters.
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