Download or read book Market Dominance and Behavior Based Pricing Under Horizontal and Vertical Differentiation written by Thomas Gehrig and published by . This book was released on 2007 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We evaluate behavior-based price discrimination from an antitrust perspective by focusing on an industry with inherited market dominance. Under horizontal differentiation behavior-based pricing does not by itself lead to persistence of dominance unless the dominant firm is protected by significantly higher switching costs than its small rival. This result continues to hold even if the dominant firm can use behavior-based pricing to compete against an entrant with no access to consumers' purchase histories. Under vertical differentiation behavior-based pricing enhances the dominance of the high-quality seller and, hence, consumer welfare.
Download or read book Market Dominance and Behaviour based Pricing Under Horizontal and Vertical Differentiation written by Thomas Gehrig and published by . This book was released on 2007 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Price Discrimination written by Fouad Sabry and published by One Billion Knowledgeable. This book was released on 2024-03-27 with total page 374 pages. Available in PDF, EPUB and Kindle. Book excerpt: What is Price Discrimination Price discrimination is a microeconomic pricing strategy where identical or largely similar goods or services are sold at different prices by the same provider in different market segments. Price discrimination is distinguished from product differentiation by the more substantial difference in production cost for the differently priced products involved in the latter strategy. Price differentiation essentially relies on the variation in the customers' willingness to pay and in the elasticity of their demand. For price discrimination to succeed, a firm must have market power, such as a dominant market share, product uniqueness, sole pricing power, etc. All prices under price discrimination are higher than the equilibrium price in a perfectly competitive market. However, some prices under price discrimination may be lower than the price charged by a single-price monopolist. Price discrimination is utilized by the monopolist to recapture some deadweight loss. This Pricing strategy enables firms to capture additional consumer surplus and maximize their profits while benefiting some consumers at lower prices. Price discrimination can take many forms and is prevalent in many industries, from education and telecommunications to healthcare. How you will benefit (I) Insights, and validations about the following topics: Chapter 1: Price discrimination Chapter 2: Monopoly Chapter 3: Monopolistic competition Chapter 4: Oligopoly Chapter 5: Perfect competition Chapter 6: Imperfect competition Chapter 7: Deadweight loss Chapter 8: Two-part tariff Chapter 9: Pricing Chapter 10: Barriers to entry Chapter 11: Yield management Chapter 12: Market power Chapter 13: Non-price competition Chapter 14: Market structure Chapter 15: Pricing strategies Chapter 16: Dynamic pricing Chapter 17: Revenue management Chapter 18: Value-based pricing Chapter 19: Rental value Chapter 20: Profit (economics) Chapter 21: Monopoly price (II) Answering the public top questions about price discrimination. (III) Real world examples for the usage of price discrimination in many fields. Who this book is for Professionals, undergraduate and graduate students, enthusiasts, hobbyists, and those who want to go beyond basic knowledge or information for any kind of Price Discrimination.
Download or read book Behavior Based Price Personalization Under Vertical Product Dfferentiation written by Paolo G. Garella and published by . This book was released on 2020 with total page 25 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study price personalization in a two period duopoly with vertically differentiated products. In the second period a firm knows the purchase history of all customers, as in the standard Behavior Based Price Discrimination models. However in the second period it also has detailed personal information on its own customers, enabling it to quote personalized prices. The analysis reveals that there exists a natural market (nm) for each firm, defined as the set of customers that cannot be poached by the rival in period two. Since in equilibrium all contestable consumers belong to the largest nm, poaching will only be one way. The firm with the largest nm, has highest profits, but not necessarily the largest market share. All consumers gain from price personalization..Profits are lower than under uniform pricing. Quality choice is well defined for the low quality and a quality dfferential arises, though the exact choice for the high quality depends upon the cost specification.
Download or read book Issues in Pricing written by Timothy Michael Devinney and published by Free Press. This book was released on 1988 with total page 440 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Conflict of Price Differentiation and Price Fairness written by Luisa Domanska and published by GRIN Verlag. This book was released on 2019-01-11 with total page 105 pages. Available in PDF, EPUB and Kindle. Book excerpt: Master's Thesis from the year 2018 in the subject Business economics - Business Management, Corporate Governance, grade: 1,7, Cologne Business School Köln, language: English, abstract: The thesis describes the conflict of price differentiation strategies and the consumers' perception of price fairness in different manners. By that, the role of a price is explained in detail in the role of marketing, as well as it's role in behavioral economics regarding price fairness. Different examples, being a highly discussed topic in the current state of the art, are brought together to demonstrate the variety of this price policy. Uber, the haircutting industry as well as typical gender-based pricing or emergency situations represent crucial practices that are discussed in regard of moral and ethical limitations in terms of price fairness. Finally, the work aims to understand the limitations on price differentiation in the context of price fairness and tries to answer questions as: When is price differentiation acceptable for consumers and when should firms reconsider differential price strategies due to a perceived abuse of trust, anger or similar emotions of targeted customers? For that, an empirical social research is considered to bring first and secondary data together, and to enable the defintion of those limitations to become a little clearer.
Download or read book Spatial Pricing and Differentiated Markets written by George Norman and published by Taylor & Francis. This book was released on 1986 with total page 190 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Behavior Based Pricing in Marketing Channels written by Krista J. Li and published by . This book was released on 2018 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: With behavior-based pricing (BBP), firms use customers' purchase history data to price discriminate between past customers and new customers. Prior research has examined BBP in a non-channel setting. In this paper, we investigate BBP in a channel setting in which manufacturers sell to customers through exclusive retailers. We examine how channel members' adoption of BBP affects wholesale and retail prices, profits, consumer surplus, and social welfare. We find that BBP decreases channel members' profits when retailers use BBP and manufacturers use uniform pricing. However, BBP increases channel members' profits when both manufacturers and retailers use BBP. In addition, BBP by retailers alone increases consumer surplus, whereas BBP by both manufacturers and retailers decreases consumer surplus. When manufacturers also use BBP, BBP decreases social welfare to a greater degree than when only retailers use BBP. Furthermore, when manufacturers cannot use BBP, their profits are higher with long-term wholesale price contracts. When manufacturers can use BBP, short-term wholesale price contracts yield higher profits for manufacturers and retailers.
Download or read book Behavior Based Price Discrimination with a General Demand written by Rosa Branca Esteves and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper offers a complete picture of the impact of behavior-based price discrimination on profits, consumer surplus, and welfare in markets with a general demand function, where consumers and firms can discount the future at different discount factors. Regardless of the demand function considered, in comparison to uniform pricing, BBPD reduces firmsí second-period prices and profits. In contrast, we show that new results arise regarding the impact of BBPD on first-period prices. Under perfectly inelastic and CES demand, the firm-side e§ect is null and the consumer-side e§ect fully explains the increase in first-period prices. This is no longer the case when the price elasticity of demand varies with price level. Specifically, we show that the firm-side effect can lead firms to raise first-period prices, even when consumers are myopic. We also show that, depending on the demand function considered, the consumer side effect can act to reduce or increase first-period prices. The overall impact of BBPD on first-period prices depends on the interplay between these two effects. Our analysis reveals that the output effect and consumer switching play an important role in explaining the impact of BBPD on welfare. When discount factors are equal, BBPD may have a positive or negative impact on consumer surplus and social welfare, which contrasts with the result that BBPD is beneficial for consumers under a unit and CES demand. For a linear demand function, we identify the regions for firms and consumers discount factors where BBPD can simultaneously enhance or reduce total discounted profits, consumer surplus, and social welfare.
Download or read book Behavior based Price Discrimination and Product Choice written by Chongwoo Choe and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We study a two-period model of behavior-based price discrimination in Fudenberg and Tirole (2000) but allow firms to make product choice in the first period. We show that the only possible equilibrium involves maximal differentiation. This is in contrast to Choe et al. (2018) where equilibrium features less than maximal differ- entiation when competition is in personalized pricing. Thus, our result highlights an important interplay between the type of price competition and product choice.
Download or read book Transparency of Behavior Based Pricing written by Li, Xi and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Behavior-based pricing (BBP) refers to the practice in which firms collect consumers' purchase history data, recognize repeat and new consumers from the data, and offer them different prices. BBP is a prevalent practice for firms and a worldwide concern for consumers. Extant research has examined BBP under the assumption that consumers observe firms' practice of BBP. However, consumers do not know this for specific firms and are often unaware of how firms collect and use their data. In this paper, we examine how firms make BBP decisions when consumers do not observe whether firms perform BBP and how the transparency of firms' BBP practice affects firms and consumers. We find that when consumers do not observe firms' practice of BBP and the cost of implementing BBP is low, a firm indeed practices BBP, even though BBP is a dominated strategy when consumers observe it. When the cost is moderate, the firm does not use BBP; however, it must distort its first-period price downward to signal and convince consumers of its choice. A high cost of implementing BBP serves as a commitment device that the firm will forfeit BBP, thereby improving firm profit. By comparing regimes in which consumers observe and do not observe a firm's practice of BBP, we find that transparency of BBP increases firm profit but decreases consumer surplus and social welfare. Therefore, commanding firms to disclose collection and usage of consumer data could hurt consumers and lead to unintended consequences.
Download or read book Behavior Based Price Discrimination with Experience Goods written by Hoe Sang Chung and published by . This book was released on 2016 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the profitability of behavior-based price discrimination (BBPD) by duopolists producing horizontally differentiated experience goods. Considering a three-stage game in which the firms first make price discrimination decisions followed by two-stage pricing decisions, the two main results we obtain are the following: (i) if consumers underestimate the quality of the products at a level that is not very low, there are two subgame perfect Nash equilibria where both firms do not collect information about consumers' purchase histories so that neither firm price discriminates and where both firms collect consumer information to practice BBPD; (ii) BBPD is more profitable than uniform pricing if consumers overestimate at a more than moderate level.
Download or read book Behavior Based Pricing written by Krista J. Li and published by . This book was released on 2015 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: Firms tracking consumer purchase information often use behavior-based pricing (BBP), i.e., price discriminate between consumers based on preferences revealed from purchase histories. However, behavioral research has shown that such pricing practices can lead to perceptions of unfairness when consumers are charged a higher price than other consumers for the same product. This paper studies the impact of consumers' fairness concerns on firms' behavior-based pricing strategy, profits, consumer surplus, and social welfare. Prior research shows that BBP often yields lower profits than profits without customer recognition or behavior-based price discrimination. In contrast, we find that firms' profits from conducting BBP increase with consumers' fairness concerns. When fairness concerns are sufficiently strong, practicing BBP is more profitable than without customer recognition. However, consumers' fairness concerns decrease consumer surplus. In addition, when consumers' fairness concerns are sufficiently strong, they reduce inefficient switching and improve social welfare.
Download or read book Behavior Based Pricing Under Asymmetric Channel Competition with Strategic Consumers written by Yingdan Zhang and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: With behavior-based pricing (BBP), retailers use customers' purchase records to price discriminate between new and past customers. In this paper, we investigate BBP in a setting where sales channels have different purchasing convenience, indicating that channels are asymmetric. We examine how the adoption of BBP affects retailers' profits, and how purchasing convenience, measured by the hassle cost in our model, affects retailers' pricing decisions. To address these questions, we build up a three-period model in which two competing retailers with different hassle costs independently decide whether to adopt BBP, and sell repeatedly purchased products to strategic customers. By comparing retailers' profits in different cases with different retailers adopting BBP, we find specific conditions under which BBP can be profitable. In particular, the retailer with the higher hassle cost are more likely to benefit from the adoption of BBP. Therefore, contrary to intuition, retailers with high hassle costs do not always need to work on improving convenience when adopting BBP. Also we find that retailers make the same decision on whether to adopt BBP in equilibrium, and their decision depends on the hassle cost gap between the two channels. Our findings provide guidance for retailers with different channel convenience on how to use BBP and respond to consumers' strategic behavior in a competitive setting.
Download or read book Positioning and Pricing of Horizontally Differentiated Products written by Aydin Alptekinoglu and published by . This book was released on 2012 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We provide structural results and a solution method for designing horizontally differentiated product lines - optimizing product positions and prices - under fairly general consumer choice behavior. Our choice model is a generalization of the basic Hotelling-Lancaster locational choice model: Consumer tastes (ideal products) follow a general distribution; substitution disutility (transportation cost) can be an asymmetric convex function of product-spatial distance; and the market may not be fully covered. We formalize the notion that a shift of consumer tastes toward one end of the product space cannot result in a shift of the optimal product line in the opposite direction. For a unimodal taste distribution, we show that with respect to the product that covers the mode (or one of two products adjacent to it) prices and market shares drop toward the tails. Hence, higher popularity is always associated with higher price - although pricing, positioning, relative market share and popularity of products are all endogenous in our model. Our solution method is exact for discrete consumer taste distributions. Whereas, for continuous distributions, it requires lower and upper bounds, which can be computed efficiently using shortest path formulations and they asymptotically converge to the optimal profit.
Download or read book Behavior based Price Discrimination Under Endogenous Privacy written by Friederike Heiny and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper analyzes consumers' privacy choice concerning their private data and firms' ensuing pricing strategy. The General Data Protection Regulation passed by the European Union in May 2018 allows consumers to decide whether to reveal private information in the form of cookies to an online seller. By incorporating this endogenous decision into a duopoly model with behavior-based pricing, we find two contrasting equilibria. Under revelation to both firms, consumers disclose their information. Under revelation to only one firm, consumers hide their information. Based on the model, we design a laboratory experiment. We find that there is a large share of consumers who reveal their private data. Particularly, less privacy-concerned subjects and subjects in the setting where only one firm receives information are more likely to reveal information.
Download or read book Microeconomics Competition and Strategic Behaviour written by Markus Thomas Münter and published by UTB. This book was released on 2022-09-05 with total page 421 pages. Available in PDF, EPUB and Kindle. Book excerpt: Microeconomics is not applied math – frameworks in this book are regularly in use in daily managerial practice and strategic decision-making. Numerous case studies cover price discrimination, economies of scale, digital business models, game theory, dealing with uncertainty, entry barriers or sunk costs – all of which are crucial for understanding market dynamics and competitive behaviour.
