Competitive Sequential Screening

Ian Ball, Deniz Kattwinkel and Jan Knoepfle

Papers from arXiv.org

Abstract: Two horizontally differentiated firms compete for consumers who are partially informed about their future preferences. The firms screen consumers by offering menus of option contracts. Each consumer enters contracts with both firms and then, after learning his preferences, purchases one product. We characterize the unique equilibrium. Consumption is distorted because each consumer is endogenously locked into one firm. Nevertheless, with sufficiently early contracting, consumer surplus is higher than under spot pricing because competition is stiffer when consumers are less informed, hence less differentiated; this reverses the conclusion in the monopoly case. Exclusive contracting further benefits consumers by intensifying competition.

Date: 2026-02, Revised 2026-02
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