Competitive imperfect price discrimination and market power

Belleflamme, Paul, Lam, Wynne and Vergote, Wouter (2020) Competitive imperfect price discrimination and market power. Marketing Science, 39 (5). 996–1015. ISSN 0732-2399

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Two duopolists compete on price in the market for a homogeneous product. They can “profile” consumers, that is, identify their valuations with some probability. If both firms can profile consumers but with different abilities, then they achieve positive expected profits at equilibrium. This provides a rationale for firms to (partially and unequally) share data about consumers or for data brokers to sell different customer analytics to competing firms. Consumers prefer that both firms profile exactly the same set of consumers or that only one firm profiles consumers as this entails marginal cost pricing (so does a policy requiring list prices to be public). Otherwise, more protective privacy regulations have ambiguous effects on consumer surplus.

Item Type: Article
Uncontrolled Keywords: bertrand competition,big data,price discrimination,price dispersion,privacy,business and international management,marketing ,/dk/atira/pure/subjectarea/asjc/1400/1403
Faculty \ School: Faculty of Social Sciences > Norwich Business School
UEA Research Groups: Faculty of Social Sciences > Research Groups > Responsible Business Regulation Group
Faculty of Social Sciences > Research Centres > Centre for Competition Policy
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Depositing User: LivePure Connector
Date Deposited: 06 May 2020 00:06
Last Modified: 31 Jan 2024 02:32
DOI: 10.1287/mksc.2020.1234


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