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Would You Like to be a Prosumer? Information Revelation, Personalization and Price Discrimination in Electronic Markets

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  • Martin Bandulet
  • Karl Morasch

Abstract

Electronic commerce and flexible manufacturing allow personalization of initially standardized products at low cost. Will customers provide the information necessary for personalization? Assuming that a consumer can control the amount of information revealed, we analyze how her decision interacts with the pricing strategy of a monopolist who may abuse the information to obtain a larger share of total surplus. We consider two scenarios, one where consumers have different tastes but identical willingness to pay and another with high and low valuation customers. In both cases full revelation may only result if the monopolist can commit to a maximum price before consumers decide about disclosure.

Suggested Citation

  • Martin Bandulet & Karl Morasch, 2005. "Would You Like to be a Prosumer? Information Revelation, Personalization and Price Discrimination in Electronic Markets," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 12(2), pages 251-271.
    • Handle: RePEc:taf:ijecbs:v:12:y:2005:i:2:p:251-271
    DOI: 10.1080/13571510500128038
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    References listed on IDEAS

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    1. Alessandro Acquisti & Hal R. Varian, 2005. "Conditioning Prices on Purchase History," Marketing Science, INFORMS, vol. 24(3), pages 367-381, May.
    2. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
    3. J. Yannis Bakos, 1997. "Reducing Buyer Search Costs: Implications for Electronic Marketplaces," Management Science, INFORMS, vol. 43(12), pages 1676-1692, December.
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    Cited by:

    1. Sell, Friedrich L., 2007. "More about economic and non-economic determinants of (mutual) trust and trustworthiness," Working Papers in Economics 2007,2, Bundeswehr University Munich, Economic Research Group.

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    More about this item

    Keywords

    E-Commerce; Personalization; Asymmetric Information; Price Discrimination; JEL Classifications: D42; D82; L14;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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