Paul Belleflamme

ecolunch

Paul Belleflamme

AMSE
Price discrimination and dispersion under asymmetric profiling of consumers
Joint with
Wing Man Wynne Lam, Wouter Vergote
Venue

IBD Amphi

Îlot Bernard du Bois - Amphithéâtre

AMU - AMSE
5-9 boulevard Maurice Bourdet
13001 Marseille

Date(s)
Thursday, May 11 2017| 12:30pm to 1:45pm
Contact(s)

Ugo Bolletta: ugo.bolletta2[at]unibo.it
Mathieu Faure: mathieu.faure[at]univ-amu.fr

Abstract

Two duopolists compete in price on the market for a homogeneous product. They can use a ‘profiling technology’ that allows them to identify the willingness-to-pay of their consumers with some probability. If both firms have profiling technologies of the exact same precision, or if one firm cannot use any profiling technology, then the Bertrand paradox continues to prevail. Yet, if firms have technologies of different precisions, then the price equilibrium exhibits both price discrimination and price dispersion, with positive expected profits. Increasing the precision of both firms’ technologies does not necessarily harm consumers.