Price Discrimination in the Information Age: Prices, Poaching, and Privacy with Personalized Targeted Discounts

• 成果类型: Article
• 署名作者: Anderson, Simon; Baik, Alicia; Larson, Nathan
• 署名单位: University of Virginia; American University
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1093/restud/rdac073
• 发表日期: 2023
• 页码: 2085-2115
• 关键词: competition; MARKETS; segmentation; equilibrium; MODEL; too

摘要

We study list price competition when firms can individually target consumer discounts (at a cost) afterwards, and we address recent privacy regulation (like the GDPR) allowing consumers to choose whether to opt-in to targeting. Targeted consumers receive poaching and retention discount offers. Equilibrium discount offers are in mixed strategies, but only two firms vie for each contested consumer and final profits on them are Bertrand-like. When targeting is unrestricted, firm list pricing resembles monopoly. For plausible demand conditions and if targeting costs are not too low, firms and consumers are worse off with unrestricted targeting than banning it. However, targeting induces higher (lower) list prices if demand is convex (concave), and either side of the market can benefit if list prices shift enough in its favour. Given the choice, consumers opt in only when expected discounts exceed privacy costs. Under empirically plausible conditions, opt-in choice makes all consumers better off.