American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Personalized Pricing and Competition
American Economic Review
vol. 114,
no. 7, July 2024
(pp. 2141–70)
Abstract
We study personalized pricing in a general oligopoly model. The impact of personalized pricing relative to uniform pricing hinges on the degree of market coverage. If market conditions are such that coverage is high (e.g., the production cost is low or the number of firms is high), personalized pricing harms firms and benefits consumers, whereas the opposite is true if coverage is low. When only some firms have data to personalize prices, consumers can be worse off compared to when either all or no firms personalize prices.Citation
Rhodes, Andrew, and Jidong Zhou. 2024. "Personalized Pricing and Competition." American Economic Review, 114 (7): 2141–70. DOI: 10.1257/aer.20221524Additional Materials
JEL Classification
- D21 Firm Behavior: Theory
- D43 Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
- D82 Asymmetric and Private Information; Mechanism Design