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Consumer data and price discrimination by consideration sets

Author

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  • Chioveanu, Ioana
Abstract
In a homogeneous product oligopoly with probabilistic consideration, identical retailers compete in prices over two periods. In period two, purchase history data enables price discrimination based on consumers’ consideration patterns. Retailers discriminate by conditioning prices on a consumer’s period one supplier. Endogenously acquired consumer information is asymmetric across firms. Price discrimination underpins complete market segmentation. Sub-markets differ in market structure and competitive pressure. In unique symmetric sequential equilibrium, retailers fine-tune period two prices in response to competitive pressure and, compared to uniform pricing, charge (on average) higher period one prices and make larger expected profits, associated with lower expected consumer surplus.

Suggested Citation

  • Chioveanu, Ioana, 2024. "Consumer data and price discrimination by consideration sets," Economics Letters, Elsevier, vol. 236(C).
    • Handle: RePEc:eee:ecolet:v:236:y:2024:i:c:s0165176524000880
    DOI: 10.1016/j.econlet.2024.111605
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Price discrimination; Consumer data; Retail oligopoly; Consideration sets;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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