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Author: Ramsi Woodcock
Publisher:
ISBN:
Category :
Languages : en
Pages : 63
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Book Description
The advance of the information age will allow firms to engage in personalized pricing, a form of price discrimination that is profitable for firms, but unambiguously harmful to consumers. Antitrust can protect consumers from personalized pricing--also called perfect price discrimination--by condemning the steps firms must take to prevent resellers from undermining firms' personalized pricing schemes. To personalize prices successfully, a firm must prevent those to whom the firm wishes to charge low prices from reselling the product to those to whom the firm wishes to charge high prices. Otherwise, resellers will compete away any difference in prices. But such steps amount to conduct that harms competitors--here, resellers--and ultimately the consumers who pay the personalized prices that result. A firm that personalizes prices must therefore do the three things that together constitute illegal monopolization under Section 2 of the Sherman Act: harm competition, and consumers, in order profitably to raise prices. The right to refuse to deal with competitors, which would normally exempt this conduct from antitrust scrutiny, does not apply to personalized pricing because an available remedy--an order prohibiting personalized pricing, but not forcing firms to sell to resellers--does not lead to the forced sharing and judicial price administration that the right to refuse to deal is meant to avoid.
Author: Ramsi Woodcock
Publisher:
ISBN:
Category :
Languages : en
Pages : 63
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Book Description
The advance of the information age will allow firms to engage in personalized pricing, a form of price discrimination that is profitable for firms, but unambiguously harmful to consumers. Antitrust can protect consumers from personalized pricing--also called perfect price discrimination--by condemning the steps firms must take to prevent resellers from undermining firms' personalized pricing schemes. To personalize prices successfully, a firm must prevent those to whom the firm wishes to charge low prices from reselling the product to those to whom the firm wishes to charge high prices. Otherwise, resellers will compete away any difference in prices. But such steps amount to conduct that harms competitors--here, resellers--and ultimately the consumers who pay the personalized prices that result. A firm that personalizes prices must therefore do the three things that together constitute illegal monopolization under Section 2 of the Sherman Act: harm competition, and consumers, in order profitably to raise prices. The right to refuse to deal with competitors, which would normally exempt this conduct from antitrust scrutiny, does not apply to personalized pricing because an available remedy--an order prohibiting personalized pricing, but not forcing firms to sell to resellers--does not lead to the forced sharing and judicial price administration that the right to refuse to deal is meant to avoid.
Author: Harold Houba
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Data-driven AI pricing algorithms in on-line markets collect consumer information and use it in their pricing technologies. In the simplest symmetric Hotellingís model such technologies reduce prices and proÖts. We extend Hotellingís model with vertically di§erentiated products, cost asymmetries and arbitrary adjustment costs. We provide a characterization of competition in personalized pricing: Sellers compete in o§ering consumer surplus, personalized prices are constrained monopoly prices and social welfare is maximal. For linear adjustment costs, adopting personalized pricing technology is a dominant strategy for both sellers. We derive conditions under which the most effi cient seller increases her proÖt through personalized pricing. While aggregate consumer surplus increases, consumers with high switching costs may be hurt. Finally, we discuss several extensions of our approach such as oligopoly.
Author:
Publisher: GRIN Verlag
ISBN: 334643639X
Category : Business & Economics
Languages : en
Pages : 24
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Book Description
Academic Paper from the year 2020 in the subject Business economics - General, grade: 72/100 (First Class Honours), Trinity College Dublin, language: English, abstract: This essay is about pricing, a core area of marketing. More specifically, it is about personalised pricing, which must not be confused with dynamic pricing. Personalised pricing describes adjusting the price for every single customer individually, while dynamic pricing describes adjusting the price for all customers subject to external factors like the current demand as of this moment, for example. If an airline company for instance lifts prices on weekends because demand is stronger on weekends in general, this is dynamic pricing. If the airline company however increases the price only for one particular customer, because they find out, for instance, that the customer uses a certain computer type which makes him likely to be wealthier than other customers, this is personalised pricing. The underlying motivation of this essay is to critically assess how personalised pricing is carried out and whether it should be adopted. Therefore, this essay takes the following approach and structure. Firstly, it is examined whether personalised pricing is legally permitted. Only if it is legally permitted to personalise prices it is worthwhile to further investigate this topic. Secondly, the customer’s willingness to pay is analysed. In order to personalise prices, it is necessary to know a customer’s exact willingness to pay. Thirdly, the topic of price elasticity is elaborated. It is necessary to assess whether profit is increased via increasing prices or decreasing prices and therefore higher demand. Fourthly, resulting retaliation as a consequence is explored. It is critically examined whether personalised pricing should be adopted, and empirical evidence is gathered to determine a retribution effect of personalised pricing which might end up making this practice unprofitable.
Author: S. Nageeb Ali
Publisher:
ISBN:
Category : Consumer goods
Languages : en
Pages : 37
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Book Description
A concern central to the economics of privacy is that firms may use consumer data to price discriminate. A common response is that consumers should have control over their data and the ability to choose how firms access it. Since firms draw inferences based on both the data seen as well as the consumer's disclosure choices, the strategic implications of this proposal are unclear. We investigate whether such measures improve consumer welfare in monopolistic and competitive environments. We find that consumer control can guarantee gains for every consumer type relative to both perfect price discrimination and no personalized pricing. This result is driven by two ideas. First, consumers can use disclosure to amplify competition between firms. Second, consumers can share information that induces a seller--even a monopolist--to make price concessions. Furthermore, whether consumer control improves consumer surplus depends on both the technology of disclosure and the competitiveness of the marketplace. In a competitive market, simple disclosure technologies such as "track / do-not-track" suffice for guaranteeing gains in consumer welfare. However, in a monopolistic market, welfare gains require richer forms of disclosure technology whereby consumers can decide how much information they would like to convey.
Author: Jean-Pierre Dubé
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
We study the welfare implications of personalized pricing, an extreme form of third-degree price discrimination implemented with machine learning for a large, digital firm. Using data from a unique randomized controlled pricing field experiment we train a demand model and conduct inference about the effects of personalized pricing on firm and consumer surplus. In a second experiment, we validate our predictions in the field. The initial experiment reveals unexercised market power that allows the firm to raise its price optimally, generating a 55% increase in profits. Personalized pricing improves the firm's expected posterior profits by an additional 19%, relative to the optimized uniform price, and by 86%, relative to the firm's unoptimized status quo price. Turning to welfare effects on the demand side, total consumer surplus declines 23% under personalized pricing relative to uniform pricing, and 47% relative to the firm's unoptimized status quo price. However, over 60% of consumers benefit from lower prices under personalization and total welfare can increase under standard inequity-averse welfare functions. Simulations with our demand estimates reveal a non-monotonic relationship between the granularity of the segmentation data and the total consumer surplus under personalization. These findings indicate a need for caution in the current public policy debate regarding data privacy and personalized pricing insofar as some data restrictions may not per se improve consumer welfare.
Author: Robert Bork
Publisher:
ISBN: 9781736089712
Category :
Languages : en
Pages : 536
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Book Description
The most important book on antitrust ever written. It shows how antitrust suits adversely affect the consumer by encouraging a costly form of protection for inefficient and uncompetitive small businesses.
Author: Chongwoo Choe
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
We study a model of behavior-based price discrimination where firms can agree to share customer information that can be used for personalized pricing. We show that firms are better off sharing customer information as it softens up-front competition when they gather information, consumers are worse off as a result, but total surplus can increase thanks to the improved quality of matching between firms and consumers.
Author: Amaryllis C. Müller
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Author:
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Author: Yunchuan Liu
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
In this paper, we explore channel interactions in an information-intensive environment where the retailer can implement personalized pricing and the manufacturer can leverage both personalized pricing and entry into a direct distribution channel. We study whether a retailer can benefit from personalized pricing, and how upstream personalized pricing or entry into a direct distribution channel affects the allocation of channel profit. We find that the retailer is worse off because of its own or upstream personalized pricing, even when the retailer is a monopoly. However, it may still be optimal for the retailer to embrace personalized pricing in order to reap the strategic benefit of deterring the manufacturer from selling direct and targeting end-consumers.
