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The interaction between personalized pricing and multi-item purchases: A random utility model approach

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  • Lu, Qiuyu
  • Matsushima, Noriaki

Abstract

We construct a duopolistic random utility model to investigate the effect of personalized pricing on consumers and firms, allowing consumers to purchase from both firms. Under an exponential distribution, personalized pricing always benefits firms but can either benefit or harm consumer welfare.

Suggested Citation

  • Lu, Qiuyu & Matsushima, Noriaki, 2025. "The interaction between personalized pricing and multi-item purchases: A random utility model approach," Economics Letters, Elsevier, vol. 247(C).
    • Handle: RePEc:eee:ecolet:v:247:y:2025:i:c:s0165176524005974
    DOI: 10.1016/j.econlet.2024.112113
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    References listed on IDEAS

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    1. Jeffrey M. Perloff & Steven C. Salop, 1985. "Equilibrium with Product Differentiation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 52(1), pages 107-120.
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    4. Andrew Rhodes & Jidong Zhou, 2024. "Personalized Pricing and Competition," American Economic Review, American Economic Association, vol. 114(7), pages 2141-2170, July.
    5. Zhijun Chen & Chongwoo Choe & Noriaki Matsushima, 2020. "Competitive Personalized Pricing," Management Science, INFORMS, vol. 66(9), pages 4003-4023, September.
    6. Rosa Branca Esteves & Jie Shuai, 2022. "Personalized prices in a delivered pricing model with a price sensitive demand," NIPE Working Papers 1/2022, NIPE - Universidade do Minho.
    7. Qiuyu Lu & Noriaki Matsushima, 2024. "Personalized Pricing When Consumers Can Purchase Multiple Items," Journal of Industrial Economics, Wiley Blackwell, vol. 72(4), pages 1507-1524, December.
    8. Chongwoo Choe & Stephen King & Noriaki Matsushima, 2018. "Pricing with Cookies: Behavior-Based Price Discrimination and Spatial Competition," Management Science, INFORMS, vol. 64(12), pages 5669-5687, December.
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    10. Esteves, Rosa-Branca & Shuai, Jie, 2022. "Personalized pricing with a price sensitive demand," Economics Letters, Elsevier, vol. 213(C).
    11. Noriaki Matsushima & Tomomichi Mizuno & Cong Pan, 2023. "Personalized pricing with heterogeneous mismatch costs," Southern Economic Journal, John Wiley & Sons, vol. 90(2), pages 369-388, October.
    12. Esteves, Rosa-Branca, 2022. "Can personalized pricing be a winning strategy in oligopolistic markets with heterogeneous demand customers? Yes, it can," International Journal of Industrial Organization, Elsevier, vol. 85(C).
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    More about this item

    Keywords

    Personalized pricing; Multi-item purchases; Random utility model;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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