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Strategic loyalty reward in dynamic price Discrimination

Bernard Caillaud () and Romain de Nijs

PSE Working Papers from HAL

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://halshs.archives-ouvertes.fr/halshs-00622291
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Related works:
Working Paper: Strategic Loyalty Reward in Dynamic Price Discrimination (2014)
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