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Price Discrimination with Partial Information: Does it pay off?

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Abstract

This paper investigates the profit effects of price discrimination when firms have partial information about consumer preferences. Using a two-dimensional model of product differentiation it shows that price discrimination can boost industriy profit if firms have acess to the right kind of information about consumer preferences while remaining ignorant of othet relevant information.

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  • Rosa Branca Esteves, 2008. "Price Discrimination with Partial Information: Does it pay off?," NIPE Working Papers 12/2008, NIPE - Universidade do Minho.
    • Handle: RePEc:nip:nipewp:12/2008
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    References listed on IDEAS

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    1. Kenneth S. Corts, 1998. "Third-Degree Price Discrimination in Oligopoly: All-Out Competition and Strategic Commitment," RAND Journal of Economics, The RAND Corporation, vol. 29(2), pages 306-323, Summer.
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    6. Esteves, Rosa-Branca, 2009. "Price discrimination with partial information: Does it pay off?," Economics Letters, Elsevier, vol. 105(1), pages 28-31, October.
    7. Carmen Matutes & Pierre Regibeau, 1988. ""Mix and Match": Product Compatibility without Network Externalities," RAND Journal of Economics, The RAND Corporation, vol. 19(2), pages 221-234, Summer.
    8. Anette Boom, 2001. "On the Desirability of Compatibility with Product Selection," Journal of Industrial Economics, Wiley Blackwell, vol. 49(1), pages 85-96, March.
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    10. Tabuchi, Takatoshi, 1994. "Two-stage two-dimensional spatial competition between two firms," Regional Science and Urban Economics, Elsevier, vol. 24(2), pages 207-227, April.
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    Citations

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    Cited by:

    1. Esteves, Rosa-Branca, 2010. "Pricing with customer recognition," International Journal of Industrial Organization, Elsevier, vol. 28(6), pages 669-681, November.
    2. Paulo Bastos & Natália P. Monteiro, 2011. "Managers and Wage Policies," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 20(4), pages 957-984, December.
    3. Sumit Shrivastav, 2023. "Profitability of behavior-based price discrimination," Marketing Letters, Springer, vol. 34(4), pages 535-547, December.
    4. Didier Laussel & Ngo V. Long & Joana Resende, 2020. "The curse of knowledge: having access to customer information can reduce monopoly profits," RAND Journal of Economics, RAND Corporation, vol. 51(3), pages 650-675, September.
    5. Laussel, Didier & Long, Ngo Van & Resende, Joana, 2019. "The Curse of Knowledge: Having Access to Customer Information Can be Detrimental to Monopoly’s Profit," Discussion paper series HIAS-E-93, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    6. Jentzsch, Nicola & Sapi, Geza & Suleymanova, Irina, 2013. "Targeted pricing and customer data sharing among rivals," International Journal of Industrial Organization, Elsevier, vol. 31(2), pages 131-144.
    7. Esteves, Rosa-Branca, 2022. "Can personalized pricing be a winning strategy in oligopolistic markets with heterogeneous demand customers? Yes, it can," International Journal of Industrial Organization, Elsevier, vol. 85(C).
    8. Didier Laussel & Ngo Van Long & Joana Resende, 2022. "Dynamic monopoly and consumers profiling accuracy," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 31(3), pages 579-608, August.
    9. Didier Laussel & Ngo Van Long & Joana Resende, 2023. "Profit Effects of Consumers’ Identity Management: A Dynamic Model," Management Science, INFORMS, vol. 69(6), pages 3602-3615, June.
    10. Esteves, Rosa-Branca, 2009. "Price discrimination with partial information: Does it pay off?," Economics Letters, Elsevier, vol. 105(1), pages 28-31, October.
    11. Irina Baye & Philip Hanspach & Tim Reiz & Geza Sapi, 2024. "Customer Recognition and Mobile Geo-Targeting," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 64(4), pages 615-644, June.
    12. Fernando Alexandre & Miguel Portela & Carla Sá, 2008. "Admission conditions and graduates' employability," NIPE Working Papers 16/2008, NIPE - Universidade do Minho.
    13. Baye, Irina & Reiz, Tim & Sapi, Geza, 2018. "Customer recognition and mobile geo-targeting," DICE Discussion Papers 285, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    14. Luo, Meiling & Li, Gang & Chen, Xudong, 2021. "Competitive location-based mobile coupon targeting strategy," Journal of Retailing and Consumer Services, Elsevier, vol. 58(C).
    15. Hoe Sang Chung, 2016. "Behavior-Based Price Discrimination with Experience Goods," Manchester School, University of Manchester, vol. 84(5), pages 675-695, September.
    16. Florian Peiseler & Alexander Rasch & Shiva Shekhar, 2022. "Imperfect information, algorithmic price discrimination, and collusion," Scandinavian Journal of Economics, Wiley Blackwell, vol. 124(2), pages 516-549, April.
    17. Sumit Shrivastav, 2021. "Profitability of behavior based price discrimination," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2021-019, Indira Gandhi Institute of Development Research, Mumbai, India.
    18. Didier Laussel & Joana Resende, 2022. "When Is Product Personalization Profit-Enhancing? A Behavior-Based Discrimination Model," Management Science, INFORMS, vol. 68(12), pages 8872-8888, December.
    19. Irina Baye & Geza Sapi, 2019. "Should Mobile Marketers Collect Data Other Than Geo‐Location?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 121(2), pages 647-675, April.
    20. Didier Laussel & Joana Resende, 2022. "When Is Product Personalization Profit-Enhancing? A Behavior-Based Discrimination Model," Post-Print hal-03740642, HAL.
    21. Clavorà Braulin, Francesco, 2023. "The effects of personal information on competition: Consumer privacy and partial price discrimination," International Journal of Industrial Organization, Elsevier, vol. 87(C).
    22. Esteves, Rosa-Branca & Resende, Joana, 2019. "Personalized pricing and advertising: Who are the winners?," International Journal of Industrial Organization, Elsevier, vol. 63(C), pages 239-282.
    23. Esteves, Rosa-Branca & Carballo-Cruz, Francisco, 2023. "Can data openness unlock competition when an incumbent has exclusive data access for personalized pricing?," Information Economics and Policy, Elsevier, vol. 64(C).

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