Search and Price Discrimination Online

Eeva Mauring

No 15729, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper theoretically studies price discrimination based on search costs. "Shoppers" have a zero and "nonshoppers" a positive search cost. A consumer faces a nondiscriminatory "common" price with some probability, or a discriminatory price. In equilibrium, firms mix over the common and the shoppers' discriminatory prices, but set a singleton nonshoppers' discriminatory price. Consumer welfare increases if price discrimination is restricted enough. An individual firm's profit can increase in the number of firms. These results have important implications for regulations that limit the tracking of consumers (e.g., EU's GDPR, California's CCPA) and for evaluating competition online.

Keywords: Cookies; Consumer tracking; Price discrimination; Gdpr; Online markets; Imperfect competition; Sequential search (search for similar items in EconPapers)
JEL-codes: D43 D83 (search for similar items in EconPapers)
Date: 2022-03
New Economics Papers: this item is included in nep-bec, nep-com, nep-mic and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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