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Pareto price discrimination

Mark J. Tremblay

Economics Letters, 2019, vol. 183, issue C, -

Abstract: As the collection of consumer data becomes more common, online merchants are better equipped to price discriminate now more than ever before. While standard first-degree price discrimination benefits merchants and harms consumers relative to uniform pricing, I derive an alternative first-degree pricing strategy that achieves efficiency and Pareto improves upon the uniform pricing equilibrium. Furthermore, I show that price ceilings can enforce these Pareto price discrimination strategies, making Pareto price discrimination a viable option for merchants and policy makers.

Keywords: First-degree price discrimination; Perfect price discrimination; Personalized pricing (search for similar items in EconPapers)
JEL-codes: L12 L11 L40 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1016/j.econlet.2019.108559

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