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| Main Authors: | , |
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| Format: | Preprint |
| Published: |
2023
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| Subjects: | |
| Online Access: | https://arxiv.org/abs/2303.13295 |
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| _version_ | 1866908286139236352 |
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| author | Hu, Xiaoxiao Lei, Haoran |
| author_facet | Hu, Xiaoxiao Lei, Haoran |
| contents | A multiproduct seller is more informed than consumers about the value of her products to consumers. The seller posts a price list and segments the market through cheap-talk communication. We find that when both seller's and consumers' incentive-compatibility constraints are satisfied, the seller cannot benefit from personalized pricing (i.e., third-degree price discrimination). Based on that observation, we provide a tractable characterization of seller's maximum equilibrium profits. We apply our analysis to a credence-good setup and discuss when the credence goods seller benefits from communication. The irrelevance result breaks down when we relax seller's incentive-compatibility constraints. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2303_13295 |
| institution | arXiv |
| publishDate | 2023 |
| record_format | arxiv |
| spellingShingle | Irrelevance of personalized pricing under strategic market segmentation Hu, Xiaoxiao Lei, Haoran Theoretical Economics A multiproduct seller is more informed than consumers about the value of her products to consumers. The seller posts a price list and segments the market through cheap-talk communication. We find that when both seller's and consumers' incentive-compatibility constraints are satisfied, the seller cannot benefit from personalized pricing (i.e., third-degree price discrimination). Based on that observation, we provide a tractable characterization of seller's maximum equilibrium profits. We apply our analysis to a credence-good setup and discuss when the credence goods seller benefits from communication. The irrelevance result breaks down when we relax seller's incentive-compatibility constraints. |
| title | Irrelevance of personalized pricing under strategic market segmentation |
| topic | Theoretical Economics |
| url | https://arxiv.org/abs/2303.13295 |