Behavior-Based Personalized Pricing: When Firms Can Share Customer Information

Chongwoo Choe, Noriaki Matsushima and Mark Tremblay

ISER Discussion Paper from Institute of Social and Economic Research, Osaka University

Abstract: We study a model of behavior-based price discrimination where asymmetric firms can agree to share customer information that can be used for personalized pricing. We show that information sharing is individually rational for firms as it softens upfront competition when information is gathered, consumers are worse off as a result, but total surplus can increase thanks to the improved quality of matching between firms and consumers. These findings are robust to firm asymmetries and varying discount factors for consumers and firms.

Date: 2020-03, Revised 2021-07
New Economics Papers: this item is included in nep-com, nep-mic, nep-mkt and nep-ore
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Journal Article: Behavior-based personalized pricing: When firms can share customer information (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:dpr:wpaper:1083r

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