Full metadata record
DC Field | Value | Language |
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dc.contributor.author | Choudhary, Vidyanand | - |
dc.contributor.author | Ghose, Anindya | - |
dc.contributor.author | Mukhopadhyay, Tridas | - |
dc.contributor.author | Rajan, Uday | - |
dc.date.accessioned | 2005-10-31T21:04:05Z | - |
dc.date.available | 2005-10-31T21:04:05Z | - |
dc.date.issued | 2005-01 | - |
dc.identifier.uri | http://hdl.handle.net/2451/14103 | - |
dc.description.abstract | We develop an analytical framework to investigate the competitive implications of personalized pricing (PP), whereby firms charge different prices to different consumers, based on their willingness to pay. We embed personalized pricing in a model of vertical product differentiation, and show how it affects firmsâÃÂàchoices over quality. We show that firmsâÃÂàoptimal pricing strategies with PP may be non-monotonic in consumer valuations. When the PP firm has a high quality both firms raise their qualities, relative to the uniform pricing case. Conversely, when the PP firm has low quality, both firms lower their qualities. Although many firms are trying to implement such pricing policies, we find that a higher quality firm can actually be worse off with PP. While it is optimal for the firm adopting PP to increase product differentiation, the non-PP firm seeks to reduce differentiation by moving in closer in the quality space. While PP results in a wider market coverage, it also leads to aggravated price competition between firms. Since this entails a change in equilibrium qualities, the nature of the cost function determines whether firms gain or lose by implementing such PP policies. Despite the threat of first-degree price discrimination, we find that personalized pricing with competing firms can lead to an overall increase in consumer welfare. | en |
dc.format.extent | 285435 bytes | - |
dc.format.mimetype | application/pdf | - |
dc.language | English | EN |
dc.language.iso | en_US | - |
dc.publisher | Stern School of Business, New York University | en |
dc.relation.ispartofseries | CeDER-05-07 | - |
dc.subject | Personalized Pricing | en |
dc.subject | Quality Differentiation | en |
dc.subject | Price Competition | en |
dc.title | Personalized Pricing and Quality Differentiation | en |
dc.type | Working Paper | en |
dc.description.series | Information Systems Working Papers Series | EN |
Appears in Collections: | CeDER Working Papers IOMS: Information Systems Working Papers |
Files in This Item:
File | Description | Size | Format | |
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CeDER-05-07.pdf | 278.75 kB | Adobe PDF | View/Open |
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