Strategic loyalty reward in dynamic price Discrimination

Bernard Caillaud () and Romain de Nijs

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Abstract: This paper proposes a dynamic model of duopolistic competition under behaviorbased price discrimination with the following property: in equilibrium, a firm may reward its previous customers although long term contracts are not enforceable. A firm can offer a lower price to its previous customers than to its new customers as a strategic means to hamper its rival to gather precise information on the young generation of customers for subsequent profitable behavior-based pricing. The result holds both with myopic and forward-looking, impatient enough consumers.

Keywords: Price discrimination; Dynamic pricing; Loyalty reward (search for similar items in EconPapers)
Date: 2011-09
New Economics Papers: this item is included in nep-bec, nep-com, nep-ind and nep-mkt
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00622291v1
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:hal:psewpa:halshs-00622291

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