Price Discrimination and Dispersion under Asymmetric Profiling of Consumers

Paul Belleflamme, Wing Man Wynne Lam () and Wouter Vergote
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Wing Man Wynne Lam: University of Liège

No 1713, AMSE Working Papers from Aix-Marseille School of Economics, France

Abstract: Two duopolists compete in price on the market for a homogeneous product. They can use a 'profiling technology' that allows them to identify the willingness-to-pay of their consumers with some probability. If both firms have profiling technologies of the exact same precision, or if one firm cannot use any profiling technology, then the Bertrand paradox continues to prevail. Yet, if firms have technologies of different precisions, then the price equilibrium exhibits both price discrimination and price dispersion, with positive expected profits. Increasing the precision of both firms’ technologies does not necessarily harm consumers.

Keywords: price discrimination; price dispersion; Bertrand competition (search for similar items in EconPapers)
JEL-codes: D11 D18 L12 L86 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2017-04
New Economics Papers: this item is included in nep-bec, nep-com, nep-ind, nep-mic and nep-mkt
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Citations: View citations in EconPapers (7)

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Related works:
Working Paper: Price Discrimination and Dispersion under Asymmetric Profiling of Consumers (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:aim:wpaimx:1713

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