We study price discrimination strategy of an Incumbent platform that faces competition from Entrant. introduce heterogeneous agents on the consumer side, where buyers assign different values to interaction benefits generated a platform. analyse dominant firm equilibrium, incumbent offers two versions its service consumers. The results are compared across scenarios. first is when sellers allowed...

We study the strategic impacts of behavioral price discrimination on manufacturers and retailers in a distribution channel when there are switching costs in consumer demand. Unlike previous empirical studies of behavioral price discrimination, which rely only on differences in price elasticity across customers, our pricing model allows the strategies of channel members to additionally account f...

Economic theory suggests that a monopolist can price discriminate more successfully than can a perfectly competitive firm. Most real-life markets, however, fall somewhere in between the two extremes. What happens as the market becomes more competitive: Does price discrimination increase or decrease? This paper examines how price discrimination changes with market concentration in the airline ma...

We analyze the welfare impacts of price discrimination in a two-dimensional spatial differentiation model. Consumer information of varying qualities is available on one dimension which allows firms to price discriminate, and better information leads to more refined price discrimination. We find that as information quality improves, firms’ profits monotonically increase while consumer surplus an...

Price discrimination refers to the practice of dynamically varying the prices of goods based on a customer’s purchasing power and willingness to pay. In this paper, motivated by several anecdotal accounts, we report on a three-week experiment, conducted in search of price discrimination in airline tickets. Despite presenting the companies with multiple opportunities for discriminating us, and c...

I introduce Price Discrimination facilitated by personal information, and the impetus for a principled discussion of this issue. b. Related phenomena I point to other market trends that relate to the issue under discussion: consumer data mining, targeted advertising, dynamic pricing, CRM, and argue there is reason to suspect that consumer information is being increasingly used to facilitate pri...

This article outlines recent methods and applications directed at understanding the profit and consumer welfare implications of increasingly prevalent price discrimination strategies in the service sector. These industries are typically characterized by heterogeneity in consumers’ valuation and usage of the service, resale constraints, and a focus on price as the service’s key attribute. The ar...

a r t i c l e i n f o JEL classifications: F13 L42 L13 D92 Keywords: price discrimination investment parallel trade pharmaceuticals net neutrality We examine a model of a monopolist selling to two segments of consumers with different preferences for quality. We show that if the firm is unable to price discriminate between the segments, then there is less investment in quality. We find that both...

Many markets for homogeneous goods feature market power and heterogeneity in the prices paid by buyers. Search costs are a common explanation for this phenomenon and are a concern as they generate inefficiencies. In this paper, I study a competitive market for homogeneous goods and, by exploiting a unique dataset, I find three facts that are opposite to what one would expect from a market with ...