Price Discrimination and Dispersion under Asymmetric Profiling of Consumers

Paul Belleflamme, Wing Man Wynne Lam and Wouter Vergote
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Wing Man Wynne Lam: ULiège - Université de Liège = University of Liège = Universiteit van Luik = Universität Lüttich

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Abstract: Two duopolists compete in price on the market for a homogeneous product. They can use a 'profiling technology' that allows them to identify the willingness-to-pay of their consumers with some probability. If both firms have profiling technologies of the exact same precision, or if one firm cannot use any profiling technology, then the Bertrand paradox continues to prevail. Yet, if firms have technologies of different precisions, then the price equilibrium exhibits both price discrimination and price dispersion, with positive expected profits. Increasing the precision of both firms' technologies does not necessarily harm consumers.

Keywords: price discrimination; price dispersion; Bertrand competition (search for similar items in EconPapers)
Date: 2017-04
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-01502452v1
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Citations: View citations in EconPapers (8)

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Working Paper: Price Discrimination and Dispersion under Asymmetric Profiling of Consumers (2017)
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