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Personalized Pricing and Competition

Author

Listed:
  • Andrew Rhodes

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Jidong Zhou

    (Yale University [New Haven])

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," Post-Print hal-04691711, HAL.
    • Handle: RePEc:hal:journl:hal-04691711
    DOI: 10.1257/aer.20221524
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    Citations

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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. Lu, Qiuyu & Matsushima, Noriaki & Shekhar, Shiva, 2025. "Welfare implications of personalized pricing in competitive platform markets: The role of network effects," International Journal of Industrial Organization, Elsevier, vol. 103(PB).
    3. Li, Xiaochuan & Li, Guo & Wu, Huamin & Tang, Ou, 2025. "Service portfolio design for ship-then-shop subscription in online retailing," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 199(C).
    4. Abrardi, Laura & Cambini, Carlo & Pino, Flavio, 2024. "Regulating data sales: The role of data selling mechanisms," Telecommunications Policy, Elsevier, vol. 48(8).
    5. 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.
    6. Esteves, Rosa-Branca & Carballo-Cruz, Francisco, 2025. "A general framework for retailer competition under elastic demand and quantity-dependent transport costs," Journal of Retailing and Consumer Services, Elsevier, vol. 87(C).
    7. 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.
    8. Bond, Philip & Levit, Doron, 2025. "ESG: A panacea for market power?," Journal of Financial Economics, Elsevier, vol. 165(C).
    9. 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.
    10. 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.
    11. Foros, Øystein & Kind, Hans Jarle & Nguyen-Ones, Mai, 2024. "The choice of pricing format: Firms may choose uniform pricing over personalized pricing to induce rivals to soften competition," Information Economics and Policy, Elsevier, vol. 66(C).
    12. 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).
    13. Xavier d'Haultfoeuille & Isis Durrmeyer & Jean-François Fournel & Alessandro Iaria, 2025. "Price discrimination and online sales in the automobile industry," Working Papers hal-05157451, HAL.
    14. 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).
    15. Brian C. Albrecht & Mark Whitmeyer, 2023. "Comparison Shopping: Learning Before Buying From Duopolists," Papers 2302.06580, arXiv.org, revised Apr 2023.
    16. Adachi, Takanori, 2023. "A sufficient statistics approach for welfare analysis of oligopolistic third‐degree price discrimination," International Journal of Industrial Organization, Elsevier, vol. 86(C).
    17. Tan, Guofu & Zhou, Junjie, 2024. "Consumer heterogeneity and inefficiency in oligopoly markets," Journal of Economic Theory, Elsevier, vol. 220(C).
    18. Xuefeng Zhang & Ji Luo & Xiao Liu, 2025. "Differentiated Advertising, Heterogeneous Consumers and Suitable Design of Platform Merchant," Mathematics, MDPI, vol. 13(10), pages 1-32, May.
    19. Heiny, Friederike & Li, Tianchi & Tolksdorf, Michel, 2025. "We value your privacy: Behavior-based pricing under endogenous privacy," VfS Annual Conference 2025 (Cologne): Revival of Industrial Policy 325415, Verein für Socialpolitik / German Economic Association.
    20. Carl-Christian Groh, & Jonas von Wangenheim, 2024. "Pigou Meets Wolinsky: Search, Price Discrimination, and Consumer Sophistication," CRC TR 224 Discussion Paper Series crctr224_2024_527, University of Bonn and University of Mannheim, Germany.
    21. 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.
    22. Peng Xu & Yibing Wang & Qin Zhang, 2025. "Personalized Pricing of an e‐Tailer in the Presence of Identity Management," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 46(5), pages 3226-3243, July.
    23. Scott T. Nelson, 2025. "Private Information and Price Regulation in the US Credit Card Market," Econometrica, Econometric Society, vol. 93(4), pages 1371-1410, July.
    24. Xiong, Yan & Yang, Liyan, 2025. "Personalized pricing, network effects, and commitment," Journal of Economic Theory, Elsevier, vol. 227(C).
    25. Wenjie Bi & Bing Wang & Haiying Liu, 2024. "Personalized Dynamic Pricing Based on Improved Thompson Sampling," Mathematics, MDPI, vol. 12(8), pages 1-14, April.

    More about this item

    JEL classification:

    • 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
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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