Behavior-Based Personalized Pricing: When Firms Can Share Customer Information

ISER DP No. 1083, 2020

20 Pages Posted: 24 Apr 2020

See all articles by Chongwoo Choe

Chongwoo Choe

Monash University - Department of Economics

Noriaki Matsushima

Osaka University - Institute of Social and Economic Research (ISER)

Mark J. Tremblay

Miami University of Ohio

Date Written: March 30, 2020

Abstract

We study a model of behavior-based price discrimination where firms can agree to share customer information that can be used for personalized pricing. We show that firms are better off sharing customer information as it softens up-front competition when they gather information, consumers are worse off as a result, but total surplus can increase thanks to the improved quality of matching between firms and consumers.

Keywords: Information Sharing, Behavior-Based Price Discrimination, Personalized Pricing

JEL Classification: D43, L13

Suggested Citation

Choe, Chongwoo and Matsushima, Noriaki and Tremblay, Mark J., Behavior-Based Personalized Pricing: When Firms Can Share Customer Information (March 30, 2020). ISER DP No. 1083, 2020, Available at SSRN: https://ssrn.com/abstract=3564762 or http://dx.doi.org/10.2139/ssrn.3564762

Chongwoo Choe

Monash University - Department of Economics ( email )

Department of Economics
PO Box 197
Caulfield East, Victoria 3145
Australia
+61 2 9903 1125 (Phone)
+61 2 9903 1128 (Fax)

Noriaki Matsushima (Contact Author)

Osaka University - Institute of Social and Economic Research (ISER) ( email )

6-1 Mihogaoka
Ibaraki, Osaka 567-0047
Japan

Mark J. Tremblay

Miami University of Ohio ( email )

Oxford, OH 45056
United States

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