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Personalized Pricing and Competition

Author

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  • Andrew Rhodes
  • Jidong Zhou

Abstract

We study personalized pricing in a general oligopoly model. The impact of personalized pricing relative to uniform pricing hinges on the degree of market coverage. If market conditions are such that coverage is high (e.g., the production cost is low or the number of firms is high), personalized pricing harms firms and benefits consumers, whereas the opposite is true if coverage is low. When only some firms have data to personalize prices, consumers can be worse off compared to when either all or no firms personalize prices.

Suggested Citation

  • Andrew Rhodes & Jidong Zhou, 2024. "Personalized Pricing and Competition," American Economic Review, American Economic Association, vol. 114(7), pages 2141-2170, July.
    • Handle: RePEc:aea:aecrev:v:114:y:2024:i:7:p:2141-70
    DOI: 10.1257/aer.20221524
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    Cited by:

    1. Delbono, Flavio & Reggiani, Carlo & Sandrini, Luca, 2024. "Strategic data sales with partial segment profiling," Information Economics and Policy, Elsevier, vol. 68(C).
    2. Navarra, Federico & Pino, Flavio & Sandrini, Luca, 2024. "Mandated data-sharing in hybrid marketplaces," ZEW Discussion Papers 24-051, ZEW - Leibniz Centre for European Economic Research.
    3. Bond, Philip & Levit, Doron, 2025. "ESG: A panacea for market power?," Journal of Financial Economics, Elsevier, vol. 165(C).
    4. Noriaki Matsushima & Mark J. Tremblay, 2024. "Network compatibility and incumbent pricing regimes," ISER Discussion Paper 1265, Institute of Social and Economic Research, The University of Osaka.
    5. Pape, Louis-Daniel & Helmers, Christian & Iaria, Alessandro & Wagner, Stefan & Runge, Julian, 2025. "Personalized content, engagement, and monetization in a mobile puzzle game," International Journal of Industrial Organization, Elsevier, vol. 98(C).
    6. Tan, Guofu & Zhou, Junjie, 2024. "Consumer heterogeneity and inefficiency in oligopoly markets," Journal of Economic Theory, Elsevier, vol. 220(C).

    More about this item

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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