Competitive Personalized Pricing

Chen, Zhijun; Choe, Chongwoo; Matsushima, Noriaki

Competitive Personalized Pricing

Chen, Zhijun; Choe, Chongwoo; Matsushima, Noriaki

Institute of Social and Economic Research Discussion Papers, 2018, 1023, 1-51

Number of Access:449（2025-07-24 04:29 Counts）

Identifier to cite or link to this item: https://hdl.handle.net/11094/68144

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Title	Competitive Personalized Pricing
Creator	CreatorName Chen, Zhijun
	CreatorName Choe, Chongwoo
	NRID 1000080334879 1000080334879 ORCID 0000-0002-7865-3875 0000-0002-7865-3875 researchmap permalink read0116301 read0116301 Scopus Author ID 7005645778 7005645778 CreatorName Matsushima, Noriaki
Subject	Personalized pricing
	identity management
	customer targeting
Abstract	We study a duopoly model where each firm chooses personalized prices for its targeted consumers, who can be active or passive in identity management. Active consumers can bypass price discrimination and have access to the price offered to non-targeted consumers, which passive consumers cannot. When all consumers are passive, personalized pricing leads to intense competition and total industry profit lower than that under the Hotelling equilibrium. But market is always fully covered. Active consumers raise the firm's cost of serving non-targeted consumers, which softens competition. When firms have sufficiently large and non-overlapping target segments, active consumers enable firms to extract full surplus from their targeted consumers through perfect price discrimination. With active consumers, firms also choose not to serve the entire market when the commonly non-targeted market segment is small. Thus active identity management can lead to lower consumer surplus and lower social welfare. We also discuss the regulatory implications for the use of consumer information by firms as well as the implications for management.
Publisher	The Institute of Social and Economic Research, Osaka University
Source Title	Institute of Social and Economic Research Discussion Papers
Volume (Issue)	1023
Page	1-51
Date of Issued	2018-03-09
Language	English
Handle URL	https://hdl.handle.net/11094/68144
Relation.references	URI https://www.iser.osaka-u.ac.jp/static/resources/docs/dp/2018/DP1023.pdf
Access Rights	metadata only access
Category	ディスカッション／ワーキング・ペーパー DP/WP
Category	Institute of Social and Economic Research Discussion Papers

Resource Type	technical report
Local Type	DP/WP
DCMI Type	Text
DCTERMS.bibliographicCitation	Institute of Social and Economic Research Discussion Papers. 2018, 1023, p. 1-51
DC.title	Competitive Personalized Pricing
DC.creator	Chen, Zhijun
	Choe, Chongwoo
	Matsushima, Noriaki
DC.publisher	The Institute of Social and Economic Research, Osaka University
DC.language' scheme='DCTERMS.RFC1766	English
DC.type' scheme='DCTERMS.DCMIType	Text
DCTERMS.issued' scheme='DCTERMS.W3CDTF	2018-03-09
DC.relation' scheme='DCTERMS.URI	https://www.iser.osaka-u.ac.jp/static/resources/docs/dp/2018/DP1023.pdf
DC.subject	Personalized pricing
	identity management
	customer targeting
DCTERMS.abstract	We study a duopoly model where each firm chooses personalized prices for its targeted consumers, who can be active or passive in identity management. Active consumers can bypass price discrimination and have access to the price offered to non-targeted consumers, which passive consumers cannot. When all consumers are passive, personalized pricing leads to intense competition and total industry profit lower than that under the Hotelling equilibrium. But market is always fully covered. Active consumers raise the firm's cost of serving non-targeted consumers, which softens competition. When firms have sufficiently large and non-overlapping target segments, active consumers enable firms to extract full surplus from their targeted consumers through perfect price discrimination. With active consumers, firms also choose not to serve the entire market when the commonly non-targeted market segment is small. Thus active identity management can lead to lower consumer surplus and lower social welfare. We also discuss the regulatory implications for the use of consumer information by firms as well as the implications for management.
DC.format	68144
citation_title	Competitive Personalized Pricing
citation_author	Chen, Zhijun
	Choe, Chongwoo
	Matsushima, Noriaki
citation_publisher	The Institute of Social and Economic Research, Osaka University
citation_language	English
citation_date	2018-03-09
citation_journal_title	Institute of Social and Economic Research Discussion Papers
citation_volume	1023
citation_firstpage	1
citation_lastpage	51
citation_public_url	https://hdl.handle.net/11094/68144
citation_abstract_html_url	https://www.iser.osaka-u.ac.jp/static/resources/docs/dp/2018/DP1023.pdf

Competitive Personalized Pricing

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