TY - JOUR
T1 - Behavior-based price discrimination and product choice
AU - Choe, Chongwoo
AU - Matsushima, Noriaki
PY - 2021
Y1 - 2021
N2 - We study a two-period model of behavior-based price discrimination, as in Fudenberg and Tirole (RAND J Econ 31(4):634–657, 2000), but we allow firms to make their product choices in the first period. We show that the only possible equilibrium involves maximal differentiation. This is in contrast to Choe et al. (Manag Sci 64(12):5669–5687, 2018), where equilibrium features less-than-maximal differentiation when competition is in personalized pricing. Thus, our result highlights an important interplay between the type of price competition and product choice.
AB - We study a two-period model of behavior-based price discrimination, as in Fudenberg and Tirole (RAND J Econ 31(4):634–657, 2000), but we allow firms to make their product choices in the first period. We show that the only possible equilibrium involves maximal differentiation. This is in contrast to Choe et al. (Manag Sci 64(12):5669–5687, 2018), where equilibrium features less-than-maximal differentiation when competition is in personalized pricing. Thus, our result highlights an important interplay between the type of price competition and product choice.
KW - Behavior-based price discrimination
KW - Product choice
KW - Spatial competition
UR - http://www.scopus.com/inward/record.url?scp=85089366248&partnerID=8YFLogxK
U2 - 10.1007/s11151-020-09783-x
DO - 10.1007/s11151-020-09783-x
M3 - Article
AN - SCOPUS:85089366248
VL - 58
SP - 263
EP - 273
JO - Review of Industrial Organization
JF - Review of Industrial Organization
SN - 0889-938X
ER -