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Behavior-based pricing with experience goods

Author

Listed:
  • Romain de Nijs

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - Groupe ENSAE-ENSAI - Groupe des Écoles Nationales d'Économie et Statistique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - Groupe ENSAE-ENSAI - Groupe des Écoles Nationales d'Économie et Statistique - IP Paris - Institut Polytechnique de Paris - CNRS - Centre National de la Recherche Scientifique, PSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique)

  • Andrew Rhodes

    (Department of Economics - University of Oxford)

Abstract

We consider a two-period model in which duopolists sell experience goods and practice behavior-based price discrimination (BBPD). We give general conditions for when firms should offer a lower price to existing customers ('pay-to-stay') or to new customers ('pay-to-switch'). We also demonstrate that unlike previous results, BBPD may intensify competition in the first period but weaken it in the second.

Suggested Citation

  • Romain de Nijs & Andrew Rhodes, 2013. "Behavior-based pricing with experience goods," PSE-Ecole d'économie de Paris (Postprint) halshs-00916563, HAL.
    • Handle: RePEc:hal:pseptp:halshs-00916563
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    Cited by:

    1. González, María P. & Scartascini, Carlos, 2023. "Increasing the Use of Telemedicine: A Field Experiment," IDB Publications (Working Papers) 12850, Inter-American Development Bank.
    2. Monire Jalili & Michael S. Pangburn, 2020. "Pricing Joint Sales and Rentals: When are Purchase Conversion Discounts Optimal?," Production and Operations Management, Production and Operations Management Society, vol. 29(12), pages 2679-2695, December.
    3. De Nijs, Romain, 2017. "Behavior-based price discrimination and customer information sharing," International Journal of Industrial Organization, Elsevier, vol. 50(C), pages 319-334.
    4. Sá, Luís & Straume, Odd Rune, 2024. "Hospital competition when patients learn through experience," Journal of Health Economics, Elsevier, vol. 97(C).
    5. Romain de Nijs, 2015. "Behavior-based price discrimination and customer information sharing," Working Papers hal-01226250, HAL.
    6. Hoe Sang Chung, 2016. "Behavior-Based Price Discrimination with Experience Goods," Manchester School, University of Manchester, vol. 84(5), pages 675-695, September.
    7. Bernard Caillaud & Romain De Nijs, 2014. "Strategic Loyalty Reward in Dynamic Price Discrimination," Marketing Science, INFORMS, vol. 33(5), pages 725-742, September.
    8. Mao, Zhaofang & Du, Zelin & Yuan, Ruiying & Miao, Qiqi, 2022. "Short-term or long-term cooperation between retailer and MCN? New launched products sales strategies in live streaming e-commerce," Journal of Retailing and Consumer Services, Elsevier, vol. 67(C).
    9. Seung Hwan (Shawn) Lee & Scott Fay, 2017. "Why offer lower prices to past customers? Inducing favorable social price comparisons to enhance customer retention," Quantitative Marketing and Economics (QME), Springer, vol. 15(2), pages 123-163, June.
    10. Qian Chen & Yumeng Wang & Yeming Gong & Shan Liu, 2023. "Ripping off regular consumers? The antecedents and consequences of consumers’ perceptions of e-commerce platforms’ digital power abuse," Post-Print hal-04339460, HAL.

    More about this item

    Keywords

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    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • M4 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting

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