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Price Discrimination As Portfolio Diversification

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  • Parikshit Ghosh

    (Indian Statistical Institute)

Abstract

A seller seeking to sell an indivisible object can post (possibly different) prices to each of n buyers. Buyers' valuations are private information and drawn independently from the same distribution. If the seller can choose who to sell to in the event there are several willing buyers, her optimal strategy is to post different prices to different buyers. For some distributions, price discrimination may be profitable even if excess demand must be resolved through a uniform lottery.

Suggested Citation

  • Parikshit Ghosh, 2008. "Price Discrimination As Portfolio Diversification," Economics Bulletin, AccessEcon, vol. 4(5), pages 1-9.
    • Handle: RePEc:ebl:ecbull:eb-08d40018
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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