Informing Consumers about their own Preferences

Martin Peitz and Roman Inderst

No 12-07, Working Papers from University of Mannheim, Department of Economics

Abstract: We analyze a model of monopolistic price discrimination where only some consumers are originally sufficiently informed about their preferences, e.g., about their future demand for a utility such as electricity or telecommunication. When more consumers become informed, we show that this benefits also those consumers who remain uninformed, as it reduces the firm’s incentives to extract information rent. By reducing the costs of information acquisition or forcing firms to supply consumers with the respective information about past usage, policy can further improve welfare, as contracts become more efficient. The last observation stands in contrast to earlier findings by Crémer and Khalil (American Economic Review 1992), where all consumers are uninformed.

Keywords: Nonlinear pricing; price discrimination; monopolistic screening; information acquisition (search for similar items in EconPapers)
JEL-codes: D42 D82 L12 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-bec, nep-com, nep-cta, nep-mic and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:mnh:wpaper:31325

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