Competitive Imperfect Price Discrimination and Market Power

Arbeitspapier

Two duopolists compete in price on the market for a homogeneous product. They can 'profile' consumers, i.e., identify their valuations with some probability. If both firms can profile consumers but with different abilities, then they achieve positive expected profits at equilibrium. This provides a rationale for firms to (partially and unequally) share data about consumers, or for data brokers to sell different customer analytics to competing firms. Consumers prefer that both firms profile exactly the same set of consumers, or that only one firm profiles consumers, as this entails marginal cost pricing (so does a policy requiring list prices to be public). Otherwise, more protective privacy regulations have ambiguous effects on consumer surplus.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 7964

Classification and Topics

• Classification: Wirtschaft ; Consumer Economics: Theory ; Consumer Protection ; Monopoly; Monopolization Strategies ; Information and Internet Services; Computer Software
• Subject: price discrimination ; price dispersion ; Bertrand competition ; privacy ; big data

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Belleflamme, Paul ; Lam, Wing Man Wynne ; Vergote, Wouter
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2019

Further information

• Handle: http://hdl.handle.net/10419/214966
• Last update: 10.03.2025, 11:43 AM CET