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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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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. Jan Bouckaert & Hans Degryse & Theon Van Dijk, 2008. "Price Discrimination Bans on Dominant Firms," CESifo Working Paper Series 2192, CESifo Group Munich.
  2. Jan Bouckaert & Hans Degryse, 2006. "Opt In Versus Opt Out: A Free-Entry Analysis of Privacy Policies," CESifo Working Paper Series 1831, CESifo Group Munich.
  3. Degryse, H.A. & Laeven, L. & Ongena, S., 2007. "The Impact of Organizational Structure and Lending Technology on Banking Competition," Discussion Paper 2007-019, Tilburg University, Tilburg Law and Economic Center.
  4. John Thanassoulis, 2006. "Competitive Mixed Bundling and Consumer Surplus," Economics Series Working Papers 263, University of Oxford, Department of Economics.

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