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Undue Charges and Price Discrimination

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  • Gabriel Garber
  • Márcio Issao Nakane

Abstract

In this paper, we draw attention to a type of price discrimination that seems to be widespread, but has gone unnoticed by the literature: one based on false mistakes and the heterogeneous cost of complaining. We focus on the hypothetical example case of a bank manager that charges an undue fee from a client’s balance, and setup a model of price discrimination. We also devise a test for the detection of such behavior in a setting where the authorities have less information about the clients than the bank manager.

Suggested Citation

  • Gabriel Garber & Márcio Issao Nakane, 2016. "Undue Charges and Price Discrimination," Working Papers Series 427, Central Bank of Brazil, Research Department.
    • Handle: RePEc:bcb:wpaper:427
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection

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