Intertemporal Price Discrimination with Two Products

John Thanassoulis and Jean Rochet

No 12034, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study the two-product monopoly profit maximisation problem for a seller who can commit to a dynamic pricing strategy. We show that if consumers' valuations are not strongly-ordered then optimality for the seller can require intertemporal price discrimination: the seller offers a choice between supplying a complete bundle now, or delaying the supply of a component of that bundle until a later date. For general valuations we establish a sufficient condition for such dynamic pricing to be more profitable than mixed bundling. So we show that the Stokey (1979) no-discrimination-across-time result does not extend to two-product sellers when consumers' valuations are drawn from many standard distributions.

Keywords: Multidimensional mechanism design; Cross-sell; Second degree price discrimination; Bundling; Time discounting; Substitutes and complements (search for similar items in EconPapers)
JEL-codes: D42 L11 (search for similar items in EconPapers)
Date: 2017-05
New Economics Papers: this item is included in nep-com, nep-ind, nep-mic and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Journal Article: Intertemporal price discrimination with two products (2019)
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