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Behavior-Based Price Discrimination and Product Choice

Chongwoo Choe () and Noriaki Matsushima

Review of Industrial Organization, 2021, vol. 58, issue 2, No 2, 263-273

Abstract: Abstract We study a two-period model of behavior-based price discrimination, as in Fudenberg and Tirole (RAND J Econ 31(4):634–657, 2000), but we allow firms to make their product choices in the first period. We show that the only possible equilibrium involves maximal differentiation. This is in contrast to Choe et al. (Manag Sci 64(12):5669–5687, 2018), where equilibrium features less-than-maximal differentiation when competition is in personalized pricing. Thus, our result highlights an important interplay between the type of price competition and product choice.

Keywords: Behavior-based price discrimination; Spatial competition; Product choice (search for similar items in EconPapers)
JEL-codes: D43 L13 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s11151-020-09783-x

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