Journal of Economic Literature (JEL) Code(s)
D41, D42, D43, D83
We study price discrimination in a market in which two ﬁrms engage in Bertrand competition. Some consumers are contested by both ﬁrms, and other consumers are “captive” to one of the ﬁrms. The market can be divided into segments, which have diﬀerent relative shares of captive and contested consumers. It is shown that the revenue-maximizing segmentation involves dividing the market into “nested” markets, where exactly one ﬁrm may have captive consumers.
Bergemann, Dirk; Brooks, Benjamin; and Morris, Stephen, "Competition and Public Information: A Note" (2020). Cowles Foundation Discussion Papers. 13.