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Price Discrimination and Salient Thinking

Nana Adrian

Diskussionsschriften from Universitaet Bern, Departement Volkswirtschaft

Abstract: This paper generalizes the price discrimination framework of Mussa and Rosen (1978) by considering salience-driven consumer preferences in the sense of Bordalo et al. (2013b). Consumers with salience-driven preferences give a higher weight to attributes that vary more. This reduces the monopolist's propensity to treat different types of consumers differently. The paper's main result characterizes the conditions under which the monopolist induces consumers to focus on price rather than on quality.

Keywords: Salience; price discrimination; monopolist (search for similar items in EconPapers)
JEL-codes: D11 D42 D91 L11 (search for similar items in EconPapers)
Date: 2019-06
New Economics Papers: this item is included in nep-com, nep-ind and nep-mic
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