Competition and Price Discrimination in the Market for Mailing Lists

34 Pages Posted: 5 Jan 2006

See all articles by Ron Borzekowski

Ron Borzekowski

Yale University

Raphael Thomadsen

Olin School - Washington University in St. Louis

Charles Taragin

Board of Governors of the Federal Reserve System

Date Written: November 2005

Abstract

This paper examines the relationship between competition and price discrimination in the market for mailing lists. More specifically, we examine whether sellers are more likely to segregate consumers by offering a menu of quality choices (second-degree price discrimination) and/or offering different prices to readily identifiable groups of consumers (third-degree price discrimination) in more competitive markets. We also examine how the fineness with which consumers are divided corresponds to the level of competition in the market.

The dataset includes information about all consumer response lists derived from mail order buyers (i.e. lists derived from catalogs) available for rental in 1997 and 2002. Using industry classifications, we create measures of competition for each list. We then use these measures to predict whether given lists utilize discriminatory pricing strategies.

Our results indicate that lists facing more competition are more likely to implement second-degree and third-degree price discrimination, and when implementing second-degree price discrimination, to offer menus with more choices.

Keywords: Price discrimination, information goods

JEL Classification: L1, M2

Suggested Citation

Borzekowski, Ron and Thomadsen, Raphael and Taragin, Charles, Competition and Price Discrimination in the Market for Mailing Lists (November 2005). FEDS Working Paper No. 2005-56, Available at SSRN: https://ssrn.com/abstract=873875 or http://dx.doi.org/10.2139/ssrn.873875

Ron Borzekowski (Contact Author)

Yale University ( email )

493 College St
New Haven, CT CT 06520
United States

Raphael Thomadsen

Olin School - Washington University in St. Louis ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States

Charles Taragin

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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