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We consider a non-durable good monopoly that collects data on its customers in order to profile them and subsequently practice price discrimination on returning customers. The monopolist's price discrimination scheme is leaky, in the sense that an endogenous fraction of consumers choose to incur...
Persistent link: https://www.econbiz.de/10012657985
Using a Markov-perfect equilibrium model, we show that the use of customer data to practice intertemporal price discrimination will improve monopoly profit if and only if information precision is higher than a certain threshold level. This U-shaped relationship lends support to a popular view...
Persistent link: https://www.econbiz.de/10012799646
We consider a non-durable good monopoly that collects data on its customers in order to profile them and subsequently practice price discrimination on returning customers. The monopolist’s price discrimination scheme is leaky, in the sense that an endogenous fraction of consumers choose to...
Persistent link: https://www.econbiz.de/10013213778
Using a Markov-perfect equilibrium model, we show that the use of customer data to practice intertemporal price discrimination will improve monopoly profit if and only if information precision is higher than a certain threshold level. This U-shaped relationship lends support to a popular view...
Persistent link: https://www.econbiz.de/10013323970