Consumer data and price discrimination by consideration sets

Ioana Chioveanu

Economics Letters, 2024, vol. 236, issue C

Abstract: In a homogeneous product oligopoly with probabilistic consideration, identical retailers compete in prices over two periods. In period two, purchase history data enables price discrimination based on consumers’ consideration patterns. Retailers discriminate by conditioning prices on a consumer’s period one supplier. Endogenously acquired consumer information is asymmetric across firms. Price discrimination underpins complete market segmentation. Sub-markets differ in market structure and competitive pressure. In unique symmetric sequential equilibrium, retailers fine-tune period two prices in response to competitive pressure and, compared to uniform pricing, charge (on average) higher period one prices and make larger expected profits, associated with lower expected consumer surplus.

Keywords: Price discrimination; Consumer data; Retail oligopoly; Consideration sets (search for similar items in EconPapers)
JEL-codes: D43 D83 L11 L13 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:236:y:2024:i:c:s0165176524000880

DOI: 10.1016/j.econlet.2024.111605

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