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Behaviour-based price discrimination with elastic demand

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Consumer Market Behavior and Pricing Merger and Competition Analysis Digital Platforms and Economics

Abstract

Behaviour-based price discrimination is typically analysed in a framework characterised by inelastic demand. This paper provides a first assessment of the role of elastic demand on the competitive ef-fects of behaviour-based price discrimination. Our results show that if demand is elastic enough, behaviour-based price discrimination leads to demand expansion which has a positive effect on overall welfare. JEL: D43, L13.

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2000Customer Poaching and Brand Switching 1987On the Strategic Choice of Spatial Price Policy 1997Paying Customers to Switch 1998Third-Degree Price Discrimination in Oligopoly: All-Out Competition and Strategic Commitment 1999Dynamic Competition with Customer Recognition 1995Competitive Coupon Targeting 2001Individual Marketing with Imperfect Targetability 2002Competitive One-to-One Promotions

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