Signaling Targeting Cost Through List Price

• 成果类型: Article
• 署名作者: Yu, Peiwen; Zhang, Jiahua
• 署名单位: Chongqing University; Dongbei University of Finance & Economics
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2023.02031
• 发表日期: 2025
• 关键词: Personalized pricing; Targeting cost; list price; signaling; COMPETITION

摘要

Data analytics enable firms to offer personalized prices to targeted consumers but at a cost. We study a competitive personalized pricing game where the entrant is uncertain about the incumbent's targeting cost. We demonstrate that implementing personalized pricing through a list price-discount scheme allows the incumbent to signal its targeting cost via the list price. This signaling mechanism is effective because the list price serves as a price ceiling, which limits the incumbent's ability to extract consumer surplus through personalized discounts. The high-cost incumbent can strategically set its list price below the full-information level to separate itself from the low-cost incumbent. Interestingly, the high-cost incumbent prefers separating over pooling only when there is a moderate variation in the incumbents' targeting costs. Personalized pricing can affect firms differently, benefiting the incumbent but hurting the entrant. Asymmetric information about targeting costs weakens the high-cost incumbent's incentive to offer personalized discounts, resulting in lower total targeting costs and potentially increasing social surplus. These findings shed light on government regulations and transparency policies regarding personalized pricing.