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Behavior-Based Price Discrimination in a Multi-Dimensional Preferences Market

28 Pages Posted: 10 Mar 2016 Last revised: 3 Dec 2016

Rosa Branca Esteves

NIPE-University of Minho

Qihong Liu

University of Oklahoma - Department of Economics

Jie Shuai

Zhongnan University of Economics and Law

Date Written: December 2, 2016

Abstract

This article is a first look at the profit and welfare effects of behavior-based price discrimination in a two-period multi-dimensional preferences model. Compared to one-dimensional models, we show that firms compete less aggressively in both periods and so new results are obtained. Specifically, under forward looking consumers and two symmetric dimensions, BBPD boosts industry profits at the expense of consumers. However, we show that the standard one-dimensional welfare results can prevail under asymmetric dimensions and myopic consumers.

Keywords: Multi-dimension; competitive price discrimination; customer recognition; pure bundling; welfare.

JEL Classification: D43, L13, L40

Suggested Citation

Esteves, Rosa Branca and Liu, Qihong and Shuai, Jie, Behavior-Based Price Discrimination in a Multi-Dimensional Preferences Market (December 2, 2016). Available at SSRN: https://ssrn.com/abstract=2745319

Rosa Branca Esteves

NIPE-University of Minho ( email )

Braga
Portugal

Qihong Liu (Contact Author)

University of Oklahoma - Department of Economics ( email )

Norman, OK 73019-2103
United States
405-325-5846 (Phone)

HOME PAGE: http://qliu.oucreate.com

Jie Shuai

Zhongnan University of Economics and Law ( email )

182 Nanhu Ave.
East Lake High-tech Development Zone
Wuhan, Hubei 430073
China

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