We develop a model of behavior- and characteristic-based discriminatory pricing where consumers are heterogeneous both in tastes and in price sensitivity. Each firmis able to distinguish between the consumers that have bought from it and those that have bought from the rival. Furthermore, each firm learns the price sensitivity of their own consumers. We show that using this additional information may yield higher profits than uniform pricing provided that consumers are heterogeneous enough with respect to price sensitivity. We also discuss consumer surplus implications of such behaviorand characteristic-based price discrimination, and we show that the impact of price discrimination depends on both the consumer type and the level of consumers’ heterogeneity.

Colombo, S., Behavior and characteristic-based price discrimination, <<JOURNAL OF ECONOMICS & MANAGEMENT STRATEGY>>, 2018; (27): 237-250. [doi:10.1111/jems.12244] [http://hdl.handle.net/10807/121241]

Behavior and characteristic-based price discrimination

Colombo, Stefano
2018

Abstract

We develop a model of behavior- and characteristic-based discriminatory pricing where consumers are heterogeneous both in tastes and in price sensitivity. Each firmis able to distinguish between the consumers that have bought from it and those that have bought from the rival. Furthermore, each firm learns the price sensitivity of their own consumers. We show that using this additional information may yield higher profits than uniform pricing provided that consumers are heterogeneous enough with respect to price sensitivity. We also discuss consumer surplus implications of such behaviorand characteristic-based price discrimination, and we show that the impact of price discrimination depends on both the consumer type and the level of consumers’ heterogeneity.
Inglese
Colombo, S., Behavior and characteristic-based price discrimination, <<JOURNAL OF ECONOMICS & MANAGEMENT STRATEGY>>, 2018; (27): 237-250. [doi:10.1111/jems.12244] [http://hdl.handle.net/10807/121241]
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/10807/121241
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