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Behaviour‐based pricing with overlapping ownership

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  • Changying Li
  • Jianhu Zhang

Abstract

Research has extensively explored why firms use their consumer information to price discriminate between repeat and new customers. This paper incorporates overlapping ownership and explores a more nuanced explanation for the practice. We isolate the different and interactive effects of overlapping ownership in different periods on equilibrium outcomes. In our explanation, firms use overlapping ownership to increase repeat purchase and customer retention and therefore may charge higher prices for both repeat and new customers, when they choose behaviour‐based pricing rather than uniform pricing. As a result, if the degree of overlapping ownership is not too small, behaviour‐based pricing benefits firms but hurts consumers. Tarification comportementale lorsqu'il y a participation croisée. La recherche a largement exploré les raisons pour lesquelles les entreprises utilisent leurs renseignements sur les consommateurs pour établir une discrimination par les prix entre les clients réguliers et les nouveaux clients. Le présent document prend en compte la participation croisée et explore une explication plus nuancée de cette pratique. Nous isolons les effets différents et interactifs de la participation croisée à différentes périodes sur les résultats d'équilibre. Selon notre explication, les entreprises utilisent la participation croisée pour augmenter la répétition des achats et la fidélisation des clients et peuvent donc fixer des prix plus élevés pour les clients réguliers et les nouveaux clients, lorsqu'elles choisissent une tarification comportementale (TC) plutôt qu'une tarification uniforme (TU). Par conséquent, si le degré de participation croisée n'est pas trop faible, la TC profite aux entreprises, mais nuit aux consommateurs.

Suggested Citation

  • Changying Li & Jianhu Zhang, 2025. "Behaviour‐based pricing with overlapping ownership," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 58(1), pages 136-168, February.
  • Handle: RePEc:wly:canjec:v:58:y:2025:i:1:p:136-168
    DOI: 10.1111/caje.12758
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