Price Discrimination in Markets for Experts' Services
AbstractThis Paper studies the consequences of price discrimination in a market for experts’ services. In the case of experts markets, where the expert observes the intervention that a consumer needs to fix his problem and also provides a treatment, price discrimination proceeds along the dimension of quality of advice offered. High quality advice and appropriate treatment is provided to the most profitable market segment only. Less profitable consumers are induced to demand either unnecessary or insufficient procedures. The welfare consequences of price discrimination are ambiguous: On the one hand, price discrimination increases the number of consumers that get an intervention. On the other hand, some consumers that are efficiently served under non-discrimination get the wrong procedure if the expert can discriminate among customers.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4155.
Date of creation: Dec 2003
Date of revision:
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Other versions of this item:
- Uwe Dulleck & Rudolf Kerschbamer, 2003. "Price Discrimination in Markets for Experts´ Services," Vienna Economics Papers 0312, University of Vienna, Department of Economics.
- D40 - Microeconomics - - Market Structure and Pricing - - - General
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-02-29 (All new papers)
- NEP-IND-2004-02-29 (Industrial Organization)
- NEP-MIC-2004-02-29 (Microeconomics)
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