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Competitive Sequential Screening

Author

Listed:
  • Ian Ball
  • Deniz Kattwinkel
  • Jan Knoepfle

Abstract

We study competition between firms that contract with consumers before the consumers fully learn their product preferences. In a Hotelling duopoly, firms screen consumers by offering menus of option contracts. We characterize the unique equilibrium. Consumers select contracts from both firms. Each consumer is endogenously locked into the firm from which he chooses an option with a lower strike price. Lock-in yields inefficient consumption. Yet earlier contracting stiffens competition because less informed consumers are more homogeneous. Sufficiently early contracting raises consumer surplus relative to spot pricing -- reversing the ranking under monopoly. Exclusive contracting further increases consumer surplus by intensifying competition.

Suggested Citation

  • Ian Ball & Deniz Kattwinkel & Jan Knoepfle, 2026. "Competitive Sequential Screening," Papers 2602.08144, arXiv.org, revised Apr 2026.
  • Handle: RePEc:arx:papers:2602.08144
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    File URL: http://arxiv.org/pdf/2602.08144
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    Cited by:

    1. Eric Gao, 2025. "Multidimensional Sequential Screening," Papers 2512.23274, arXiv.org, revised May 2026.

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