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Profitability of behavior based price discrimination

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  • Sumit Shrivastav

    (Indira Gandhi Institute of Development Research)

Abstract

In this paper, we analyze the profitability of price discrimination based on recognition of consumers' brand preferences, in a duopoly model with switching costs. We show that, in contrast to existing studies, price discrimination results into higher profits than uniform pricing if consumers are heterogeneous in terms of brand preferences and the extent of such heterogeneity is sufficiently high.

Suggested Citation

  • Sumit Shrivastav, 2021. "Profitability of behavior based price discrimination," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2021-019, Indira Gandhi Institute of Development Research, Mumbai, India.
    • Handle: RePEc:ind:igiwpp:2021-019
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    File URL: http://www.igidr.ac.in/pdf/publication/WP-2021-019.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    BBPD; Consumer recognition; Price discrimination;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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