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Quality of Information and Oligopolistic Price Discrimination


  • Qihong Liu

    (State University of New York, Stony Brook)

  • Konstantinos Serfes

    (State University of New York, Stony Brook)


We investigate how the endogenous acquisition of information, of a certain quality level, on consumers' willingness to pay (location) affects the equilibrium prices and welfare in a spatial price discrimination model. By varying the information quality we are able to obtain the equilibrium in the game for all levels of price discrimination and in the limit the case of perfect price discrimination. This gives us insights about equilibrium behavior in markets where: 1) Information on consumer characteristics is used by the firms to facilitate price discrimination and 2) The quality of information is constantly improving due to advances of the information technology (IT).

Suggested Citation

  • Qihong Liu & Konstantinos Serfes, 2002. "Quality of Information and Oligopolistic Price Discrimination," Industrial Organization 0203004, EconWPA, revised 06 Mar 2002.
  • Handle: RePEc:wpa:wuwpio:0203004
    Note: Type of Document - pdf; prepared on PC; TeX; to print on HP/PostScript/Franciscan monk; pages: 48 ; figures: included. A previous version of this paper was titled ``Endogenous acquisition of information on consumer willingness to pay in a product differentiated duopoly.''

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    Price discrimination; Information quality; Information acquisition;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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