Personalized Pricing and Distribution Strategies

Bruno Jullien, Markus Reisinger and Patrick Rey
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Markus Reisinger: Frankfurt School of Finance & Management

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Abstract: This paper examines the effects of personalized pricing on brand distribution. We explore whether a brand manufacturer prefers to sell through its own retail outlet only (mono distribution) or through an independent retailer as well (dual distribution). Personalized pricing allows for higher rent extraction but also leads to more fierce intra-brand competition than does uniform pricing. Due to the latter effect, a brand manufacturer may prefer mono distribution even if the retailer broadens the demand of the manufacturer's product. By contrast, with uniform pricing, selling through both channels is always optimal. This result holds for wholesale contracts consisting of two-part tariffs as well as for linear wholesale tariffs. We also show that the manufacturer may obtain its largest profit in a hybrid pricing regime, in which only the retailer charges personalized prices. Keywords: personalized pricing, distribution channels, dual distribution, vertical contracting, downstream competition.

Keywords: Personalized pricing; Distribution strategies; Vertical contracting; Downstream competition. (search for similar items in EconPapers)
Date: 2022-04-06
New Economics Papers: this item is included in nep-com, nep-cta, nep-mic and nep-reg
Note: View the original document on HAL open archive server: https://hal.science/hal-03632634v1
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Personalized Pricing and Distribution Strategies (2023)
Working Paper: Personalized Pricing and Distribution Strategies (2023)
Working Paper: Personalized Pricing and Distribution Strategies (2022)
Working Paper: Personalized Pricing and Distribution Strategies (2022)
Working Paper: Personalized Pricing and Distribution Strategies (2022)
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