Price Discrimination with Private and Imperfect Information
AbstractThis paper investigates the competitive and welfare effects of information accuracy improvements in markets where firms can price discriminate after observing a private and noisy signal about a consumer’s brand preference. It shows that firms charge more to customers they believe have a brand preference for them, and that this price has an inverted-U shaped relationship with the signal’s accuracy. In contrast, the price charged after a disloyal signal has been observed falls as the signal’s accuracy rises. While industry profit and overall welfare fall monotonically as price discrimination is based on increasingly more accurate information, the reverse happens to consumer surplus.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by NIPE - Universidade do Minho in its series NIPE Working Papers with number 12/2012.
Date of creation: 2012
Date of revision:
Contact details of provider:
Postal: Núcleo de Investigação em Políticas Económicas, Escola de Economia e Gestão, Universidade do Minho, P-4710-057 Braga, Portugal
Phone: +351-253604510 ext 5532
Web page: http://www3.eeg.uminho.pt/economia/nipe/versao_inglesa/index_uk.htm
More information through EDIRC
Other versions of this item:
- Rosa Branca Esteves, 2010. "Price Discrimination with Private and Imperfect Information," NIPE Working Papers 3/2010, NIPE - Universidade do Minho.
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-01-07 (All new papers)
- NEP-COM-2013-01-07 (Industrial Competition)
- NEP-CTA-2013-01-07 (Contract Theory & Applications)
- NEP-IND-2013-01-07 (Industrial Organization)
- NEP-MIC-2013-01-07 (Microeconomics)
- NEP-MKT-2013-01-07 (Marketing)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Alexandre, Fernando & Portela, Miguel & Sá, Carla, 2008.
"Admission Conditions and Graduates' Employability,"
IZA Discussion Papers
3530, Institute for the Study of Labor (IZA).
- Natália P. Monteiro & Paulo Bastos, 2009.
"Managers and wage policies,"
NIPE Working Papers
2/2009, NIPE - Universidade do Minho.
- Rosa Branca Esteves, 2009. "A Survey on the Economics of Behaviour-Based Price Discrimination," NIPE Working Papers 5/2009, NIPE - Universidade do Minho.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Maria João Thompson).
If references are entirely missing, you can add them using this form.