Monopolistic personalized pricing with a data advantage and cross-market harm

Noriaki Matsushima

No 26E006, OSIPP Discussion Paper from Osaka School of International Public Policy, Osaka University

Abstract: This paper develops a model of two monopoly markets linked by a common consumer budget constraint. A data-rich firm can set personalized prices in one market, whereas a traditional firm in the other must charge a uniform price. Personalized pricing can expand demand in the data-rich firm's market, but because purchases come from a shared budget, it shrinks the residual demand facing the traditional firm and reduces its profit. When budgets are sufficiently tight, this adjacent-market distortion dominates same-market demand expansion, reducing total surplus. Thus, favorable same-market evidence alone is insufficient to support a benign assessment.

Keywords: personalized pricing; competition law; cross-market effects; consumer budgets (search for similar items in EconPapers)
JEL-codes: D43 K21 L13 L41 (search for similar items in EconPapers)
Pages: 47pages
Date: 2026-05
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Persistent link: https://EconPapers.repec.org/RePEc:osp:wpaper:26e006

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