(Reverse) Price Discrimination with Information Design

Dong Wei and Brett Green

American Economic Journal: Microeconomics, 2024, vol. 16, issue 2, 267-95

Abstract: A seller markets a good to a customer whose willingness to pay depends on his private type and the good's quality. The seller designs a screening mechanism that specifies both transfers and information revealed about quality. We show that the optimal mechanism can be implemented by a menu of price-experiment pairs, featuring both price discrimination and information discrimination: buyers with higher private types face lower prices and receive less discerning positive signals. Moreover, we demonstrate the complementarity between these two forms of discrimination. Information design facilitates surplus creation on the extensive margin, but causes surplus destruction on the intensive margin.

JEL-codes: D21 D42 D82 L15 M31 (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.aeaweb.org/doi/10.1257/mic.20220242 (application/pdf)
https://www.aeaweb.org/doi/10.1257/mic.20220242.appx (application/pdf)
https://www.aeaweb.org/doi/10.1257/mic.20220242.ds (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:aejmic:v:16:y:2024:i:2:p:267-95

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

DOI: 10.1257/mic.20220242

Access Statistics for this article

American Economic Journal: Microeconomics is currently edited by Johannes Hörner

More articles in American Economic Journal: Microeconomics from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().