EconPapers    
Economics at your fingertips  
 

Dynamic Personalized Pricing with Active Consumers

Xiaolei Wang
Additional contact information
Xiaolei Wang: Monash University

Warwick-Monash Economics Student Papers from Warwick Monash Economics Student Papers

Abstract: We study a two-period duopoly model where firms gather consumer data from first period customers then use them for second-period personalized pricing, with a focus on active consumers who can bypass price discrimination with identity management (IM). As a result, IM weakens competition and allows firms to adopt perfect price discrimination which gives massive profit for firms in the personalized-pricing stage. Anticipating this, firms engage in below-cost pricing in the first stage to compete for consumer data. This strategy is similar to predatory pricing not only because of below-cost pricing but firms can also recoup losses later, however, we show that in this case below-cost pricing is driven by competition and beneficial to consumers.

Keywords: Personalized pricing; behavior-based price discrimination; identity management JEL Classification: D43; L13; L5 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-com, nep-cwa and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://warwick.ac.uk/fac/soc/economics/research/w ... 8_-_xiaolei_wang.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wrk:wrkesp:08

Access Statistics for this paper

More papers in Warwick-Monash Economics Student Papers from Warwick Monash Economics Student Papers Contact information at EDIRC.
Bibliographic data for series maintained by Margaret Nash ().

 
Page updated 2022-03-26
Handle: RePEc:wrk:wrkesp:08