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Pareto price discrimination

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  • Tremblay, Mark J.

Abstract

As the collection of consumer data becomes more common, online merchants are better equipped to price discriminate now more than ever before. While standard first-degree price discrimination benefits merchants and harms consumers relative to uniform pricing, I derive an alternative first-degree pricing strategy that achieves efficiency and Pareto improves upon the uniform pricing equilibrium. Furthermore, I show that price ceilings can enforce these Pareto price discrimination strategies, making Pareto price discrimination a viable option for merchants and policy makers.

Suggested Citation

  • Tremblay, Mark J., 2019. "Pareto price discrimination," Economics Letters, Elsevier, vol. 183(C), pages 1-1.
    • Handle: RePEc:eee:ecolet:v:183:y:2019:i:c:18
    DOI: 10.1016/j.econlet.2019.108559
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    References listed on IDEAS

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    1. Malueg, David A. & Schwartz, Marius, 1994. "Parallel imports, demand dispersion, and international price discrimination," Journal of International Economics, Elsevier, vol. 37(3-4), pages 167-195, November.
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    Cited by:

    1. Guo, Wen-Chung & Lai, Fu-Chuan, 2022. "Price discrimination under online–offline competition," Economics Letters, Elsevier, vol. 216(C).

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    More about this item

    Keywords

    First-degree price discrimination; Perfect price discrimination; Personalized pricing;
    All these keywords.

    JEL classification:

    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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