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Recent Developments in the Economics of Price Discrimination

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  • Mark Armstrong

    (University College London)

Abstract

This paper selectively surveys the recent literature on price discrimination. The focus is on three aspects of pricing decisions: the information about customers available to firms; the instruments firms can use in the design of their tariffs; and the ability of firms to commit to their pricing plans. Developments in marketing technology mean that firms often have access to more information about individual customers than was previously the case. The use of this information might be restricted by public policy towards customer privacy. Where it is not restricted, firms may be unable to commit to the use they make of the information. With monopoly supply, an increased ability to engage in price discrimination will boost profit unless the firm cannot commit to its pricing policy. With competition, the effects of price discrimination on profit, consumer surplus and overall welfare depend on the kinds of information and/or instruments available to firms. The paper investigates the circumstances in which price discrimination causes all prices (and hence profit) to fall.

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File URL: http://128.118.178.162/eps/io/papers/0511/0511004.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Industrial Organization with number 0511004.

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Length: 41 pages
Date of creation: 11 Nov 2005
Date of revision:
Handle: RePEc:wpa:wuwpio:0511004

Note: Type of Document - pdf; pages: 41
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Web page: http://128.118.178.162

Related research

Keywords: Price discrimination; oligopoly; dynamic pricing;

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References

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Citations

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Cited by:
  1. Bouckaert, J.M.C. & Degryse, H.A., 2006. "Opt In versus Opt Out: A Free-Entry Analysis of Privacy Policies," Discussion Paper 2006-96, Tilburg University, Center for Economic Research.
  2. Degryse, H.A., 2008. "Price Discrimination Bans on Dominant Firms," Discussion Paper 2008-001, Tilburg University, Tilburg Law and Economic Center.
  3. John Thanassoulis, 2006. "Competitive Mixed Bundling and Consumer Surplus," Economics Series Working Papers 263, University of Oxford, Department of Economics.
  4. Hans Degryse & Luc Laeven & Steven Ongena, 2009. "The Impact of Organizational Structure and Lending Technology on Banking Competition," Review of Finance, European Finance Association, vol. 13(2), pages 225-259.

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