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Personalized Pricing When Consumers Can Purchase Multiple Items

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  • Qiuyu Lu
  • Noriaki Matsushima

Abstract

We study the impact of competitive personalized pricing in a Hotelling duopoly model where consumers can purchase from both firms. We show that the impact crucially depends on the magnitude of the additional utility from consuming the second product. Compared with uniform pricing, personalized pricing benefits both consumers and firms when the additional utility is moderate; but it harms consumers while benefiting firms when the additional utility is large. These results contrast with the existing research on competitive personalized pricing, which assumes that consumers purchase one product only.

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  • Qiuyu Lu & Noriaki Matsushima, 2024. "Personalized Pricing When Consumers Can Purchase Multiple Items," Journal of Industrial Economics, Wiley Blackwell, vol. 72(4), pages 1507-1524, December.
    • Handle: RePEc:bla:jindec:v:72:y:2024:i:4:p:1507-1524
    DOI: 10.1111/joie.12400
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    Cited by:

    1. Qiuyu Lu & Noriaki Matsushima, 2024. "Personalized Pricing When Consumers Can Purchase Multiple Items," Journal of Industrial Economics, Wiley Blackwell, vol. 72(4), pages 1507-1524, December.
    2. Noriaki Matsushima & Mark J. Tremblay, 2024. "Network compatibility and incumbent pricing regimes," ISER Discussion Paper 1265, Institute of Social and Economic Research, Osaka University.
    3. Qiuyu Lu & Noriaki Matsushima & Shiva Shekhar, 2024. "Welfare Implications of Personalized Pricing in Competitive Platform Markets: The Role of Network Effects," CESifo Working Paper Series 10994, CESifo.

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