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Behavior-based pricing with experience goods

Romain de Nijs and Andrew Rhodes ()

Economics Letters, 2013, vol. 118, issue 1, 155-158

Abstract: We consider a two-period model in which duopolists sell experience goods and practice behavior-based price discrimination (BBPD). We give general conditions for when firms should offer a lower price to existing customers (‘pay-to-stay’) or to new customers (‘pay-to-switch’). We also demonstrate that unlike previous results, BBPD may intensify competition in the first period but weaken it in the second.

Keywords: Dynamic pricing; Price discrimination; Experience goods; Skewness (search for similar items in EconPapers)
JEL-codes: L1 M4 (search for similar items in EconPapers)
Date: 2013
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