Arbeitspapier

Customer recognition and competition

We introduce three types of consumer recognition: identity recognition, asymmetric preference recognition, and symmetric preference recognition. We characterize price equilibria and compare profits, consumer surplus, and total welfare. Asymmetric preference recognition enhances profits compared with identity recognition, but firms have no incentive to exchange information regarding customer-specific preferences (symmetric preference recognition). Consumers would benefit from a policy panning information exchange regarding individual consumer preferences. Our welfare analysis shows that the gains to firms from uniform pricing (no recognition) are larger than the associated harm to consumers, regardless of which regime of customer recognition serves as the basis for comparison.

Language
Englisch

Bibliographic citation
Series: Working Papers ; No. 11-7

Classification
Wirtschaft
Asymmetric and Private Information; Mechanism Design
Subject
customer recognition
price discrimination
behavior-based pricing
Betriebliche Preispolitik
Preisdifferenzierung
Konsumentenverhalten
Zielgruppe
Asymmetrische Information
Marktforschung

Event
Geistige Schöpfung
(who)
Shy, Oz
Stenbacka, Rune
Event
Veröffentlichung
(who)
Federal Reserve Bank of Boston
(where)
Boston, MA
(when)
2011

Handle
Last update
10.03.2025, 11:41 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Shy, Oz
  • Stenbacka, Rune
  • Federal Reserve Bank of Boston

Time of origin

  • 2011

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