Undue Charges and Price Discrimination

Gabriel Garber and Marcio Nakane

No 427, Working Papers Series from Central Bank of Brazil, Research Department

Abstract: In this paper, we draw attention to a type of price discrimination that seems to be widespread, but has gone unnoticed by the literature: one based on false mistakes and the heterogeneous cost of complaining. We focus on the hypothetical example case of a bank manager that charges an undue fee from a client’s balance, and setup a model of price discrimination. We also devise a test for the detection of such behavior in a setting where the authorities have less information about the clients than the bank manager.

Date: 2016-04
New Economics Papers: this item is included in nep-ind and nep-pke
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Working Paper: Undue charges and price discrimination (2016)
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