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Search and Price Discrimination Online

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  • Mauring, Eeva

Abstract

This paper theoretically studies price discrimination based on search costs. "Shoppers" have a zero and "nonshoppers" a positive search cost. A consumer faces a nondiscriminatory "common" price with some probability, or a discriminatory price. In equilibrium, firms mix over the common and the shoppers' discriminatory prices, but set a singleton nonshoppers' discriminatory price. Less likely price discrimination mostly benefits consumers. An individual firm's profit can increase in the number of firms. These results have important implications for regulations that limit the tracking of consumers (e.g., EU's GDPR, California's CCPA) and for evaluating competition online based on the number of firms.

Suggested Citation

  • Mauring, Eeva, 2022. "Search and Price Discrimination Online," CEPR Discussion Papers 15729, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:15729
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    References listed on IDEAS

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    Cited by:

    1. Flavio Pino, 2022. "The microeconomics of data – a survey," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 49(3), pages 635-665, September.
    2. Groh, Carl-Christian, 2023. "Search, Data, and Market Power," VfS Annual Conference 2023 (Regensburg): Growth and the "sociale Frage" 277701, Verein für Socialpolitik / German Economic Association.
    3. Sander Heinsalu, 2021. "Costlier switching strengthens competition even without advertising," Papers 2104.08934, arXiv.org.

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    More about this item

    Keywords

    Cookies; Consumer tracking; Price discrimination; Gdpr; Online markets; Imperfect competition; Sequential search;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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