 Do firms always benefit from the presence of active customers?Didier Laussel Applied Economics, 2023, vol. 55, issue 20, 2292-2307 Abstract: We study price personalization in a two period duopoly with horizontally differentiated products. In the second period, a firm has collected detailed information on its old customers, using it to engage in price personalization. Customers, when returning to buy, may choose to incur a cost in order to access the standard offer of their previous provider in addition to its personalized offer and the standard offer of its rival. The analysis confirms that firms’ second period profits are boosted when consumers are active in this sense (being equal to perfect price discrimination ones when initial market hares do not differ too much) but it reveals that this advantage is dissipated and possibly over-dissipated by the resulting fierce first-period competition for the market. Two-period aggregate profits are smaller with active customers provided the consumers are naive and/or the firms patient enough. Consumers’ access to both personalized and standard firms’ offers which benefit the oligopolists in mature markets may plausibly hurt them in emergent ones. The equilibrium is shown not to depend on the level of the cost as long as it is below some critical value. Date: 2023 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:applec:v:55:y:2023:i:20:p:2292-2307 Ordering information: This journal article can be ordered from DOI: 10.1080/00036846.2022.2102571 Access Statistics for this article Applied Economics is currently edited by Anita Phillips More articles in Applied Economics from Taylor & Francis Journals |
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