CFDP Revision Date
Journal of Economic Literature (JEL) Code(s)
D43, D82, L13
We study personalized pricing in a general oligopoly model. When the market structure is fixed, the impact of personalized pricing relative to uniform pricing hinges on the degree of market coverage. If market conditions are such that coverage is high, personalized pricing harms firms and benefits consumers, whereas the opposite is true if coverage is low. However, when the market structure is endogenous, personalized pricing benefits consumers because it induces socially optimal firm entry. Finally, when only some firms have data to personalize prices, consumers can be worse off compared to when either all or no firms personalize prices.
Rhodes, Andrew and Zhou, Jidong, "Personalized Pricing and Competition" (2022). Cowles Foundation Discussion Papers. 2736.