Contidioning Prices on Purchase History

Alessandro Acquisti and Hal Varian ()

Microeconomics from University Library of Munich, Germany

Abstract: Many transactions are now computer mediated, making it possible for sellers to condition their pricing on the history of interactions with individual consumers. This paper investigates conditions under which price conditioning will or will not be used. Our simplest model involves rational consumers with constant valuations for the good being sold and a monopoly seller who can commit to a pricing policy. In this framework, the seller will not find it profitable to condition pricing on past behavior. We consider various generalizations of this model, such as allowing the seller to offer enhanced services to previous customers, making the seller unable to commit to a pricing policy, and allowing competition in the marketplace. All of these generalizations have equilibria with price conditioning.

Keywords: Price discrimination; Price conditioning; Privacy; Ecommerce (search for similar items in EconPapers)
JEL-codes: D11 D21 D91 L15 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2002-10-04
New Economics Papers: this item is included in nep-mic
Note: Type of Document - Latex; prepared on PC; pages: 39
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (99)

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Related works:
Journal Article: Conditioning Prices on Purchase History (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpmi:0210001

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