Behavior-based personalized pricing: When firms can share customer information

Chongwoo Choe, Noriaki Matsushima and Mark Tremblay

International Journal of Industrial Organization, 2022, vol. 82, issue C

Abstract: We study a two-period model of behavior-based price discrimination where firms can agree to share customer information before the first-period competition begins, and the information can be used for personalized pricing in the second-period competition. We show that information sharing is individually rational for firms as it softens upfront competition when information is gathered, consumers are worse off as a result, but total surplus can increase thanks to the improved quality of matching between firms and consumers. These findings are robust to firm asymmetries and varying discount factors for consumers and firms.

Keywords: Information sharing; Behavior-based price discrimination; Personalized pricing (search for similar items in EconPapers)
JEL-codes: D43 L13 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:82:y:2022:i:c:s0167718722000224

DOI: 10.1016/j.ijindorg.2022.102846

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