{"title":"Information, mis-information, and history-based price discrimination in a duopoly","authors":"Sumit Shrivastav","doi":"10.1016/j.infoecopol.2023.101059","DOIUrl":null,"url":null,"abstract":"<div><p><span>In this paper, we analyze the competitive and welfare effects of imperfect consumer recognition based on the consumers' purchase history in a duopoly<span> model with discrete brand preferences and switching costs. We demonstrate that the impact of consumer recognition on firms' pricing strategies, </span></span>industry profits, and welfare crucially depends on the accuracy of consumer recognition, i.e., the relative magnitude of correct and incorrect consumer recognition. An increase in the extent of incorrect recognition softens the competition if it is less than that of correct recognition; otherwise, it intensifies the competition. The impact of the accuracy of the information on consumer surplus and welfare follows from price and profit effects. We also analyze asymmetric price discrimination and the optimal strategies of a data broker if firms purchase consumer recognition technology from it.</p></div>","PeriodicalId":47029,"journal":{"name":"Information Economics and Policy","volume":"65 ","pages":"Article 101059"},"PeriodicalIF":4.5000,"publicationDate":"2023-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Information Economics and Policy","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0167624523000446","RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
Abstract
In this paper, we analyze the competitive and welfare effects of imperfect consumer recognition based on the consumers' purchase history in a duopoly model with discrete brand preferences and switching costs. We demonstrate that the impact of consumer recognition on firms' pricing strategies, industry profits, and welfare crucially depends on the accuracy of consumer recognition, i.e., the relative magnitude of correct and incorrect consumer recognition. An increase in the extent of incorrect recognition softens the competition if it is less than that of correct recognition; otherwise, it intensifies the competition. The impact of the accuracy of the information on consumer surplus and welfare follows from price and profit effects. We also analyze asymmetric price discrimination and the optimal strategies of a data broker if firms purchase consumer recognition technology from it.
期刊介绍：
IEP is an international journal that aims to publish peer-reviewed policy-oriented research about the production, distribution and use of information, including these subjects: the economics of the telecommunications, mass media, and other information industries, the economics of innovation and intellectual property, the role of information in economic development, and the role of information and information technology in the functioning of markets. The purpose of the journal is to provide an interdisciplinary and international forum for theoretical and empirical research that addresses the needs of other researchers, government, and professionals who are involved in the policy-making process. IEP publishes research papers, short contributions, and surveys.
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