Price discrimination via information provision

Se Hoon Bang and Jaesoo Kim ()

Information Economics and Policy, 2013, vol. 25, issue 4, 215-224

Abstract: We study price discrimination where different prices are offered as a bundle with different levels of information about a product. The seller’s price discrimination induces high valuation buyers to purchase a good without information and low valuation buyers to purchase with information. Our analysis highlights several interesting results about price discrimination: (i) the seller’s choice of information provision is the combination of full information and no information, (ii) products can be cheaper without information provision than with information provision, (iii) as a result of price discrimination, prices can be more dispersed as buyers’ valuations become largely similar, and (iv) the high valuation buyers purchase a damaged good and may earn negative surplus. Furthermore, we investigate under which circumstances price discrimination is more profitable than uniform pricing. We show that a decline in transportation costs which facilitate price discrimination can be welfare reducing.

Keywords: D42; D82; L11; L81; Price discrimination; Information; Screening; Online and offline (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:iepoli:v:25:y:2013:i:4:p:215-224

DOI: 10.1016/j.infoecopol.2013.06.001

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