Tracking Customer Search to Price Discriminate
AbstractThe electronic technologies of the Internet make it possible for sellers to track potential customers and discriminate between the informed and uninformed. In this article, we report an experiment that investigates the market impact of firms tracking customers and offering discriminatory prices based on search history. We find that consumers, on average, face the same prices when sellers have the ability to track customers and price discriminate as when sellers post a single price for all buyers. However, informed buyers receive lower prices when sellers can detect buyer search, whereas uninformed buyers receive lower prices when firms cannot track customers. (JEL D43, L13, C92) Copyright 2006, Oxford University Press.
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Bibliographic InfoArticle provided by Western Economic Association International in its journal Economic Inquiry.
Volume (Year): 44 (2006)
Issue (Month): 2 (April)
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Find related papers by JEL classification:
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
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- Deck, Cary & Gu, Jingping, 2012.
"Price increasing competition? Experimental evidence,"
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Elsevier, vol. 84(3), pages 730-740.
- Cary Deck & Jingping Gu, 2010. "Price Increasing Competition? Experimental Evidence," Working Papers 10-19, Chapman University, Economic Science Institute.
- Taylor Jaworskiy & Erik O. Kimbrough, 2012. "An Experimental Examination of Asset Pricing Under Market Uncertainty," Discussion Papers dp12-21, Department of Economics, Simon Fraser University.
- Vernon L. Smith, 2003.
"Constructivist and Ecological Rationality in Economics,"
American Economic Review,
American Economic Association, vol. 93(3), pages 465-508, June.
- Smith, Vernon L., 2002. "Constructivist and Ecological Rationality in Economics," Nobel Prize in Economics documents 2002-7, Nobel Prize Committee.
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