Price Discrimination in Markets for Experts' Services

Rudolf Kerschbamer and Uwe Dulleck

No 4155, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This Paper studies the consequences of price discrimination in a market for experts? services. In the case of experts markets, where the expert observes the intervention that a consumer needs to fix his problem and also provides a treatment, price discrimination proceeds along the dimension of quality of advice offered. High quality advice and appropriate treatment is provided to the most profitable market segment only. Less profitable consumers are induced to demand either unnecessary or insufficient procedures. The welfare consequences of price discrimination are ambiguous: On the one hand, price discrimination increases the number of consumers that get an intervention. On the other hand, some consumers that are efficiently served under non-discrimination get the wrong procedure if the expert can discriminate among customers.

Keywords: Price discrimination; Credence goods; Experts; Fraud (search for similar items in EconPapers)
JEL-codes: D40 D82 L15 (search for similar items in EconPapers)
Date: 2003-12
New Economics Papers: this item is included in nep-ind and nep-mic
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Working Paper: Price Discrimination in Markets for Experts´ Services (2003)
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