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Price Discrimination in Markets for Experts´ Services

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Abstract

This article studies the consequences of price discrimination in a market for experts´ services. In the case of experts markets, where the expert observers the intervention that a consumer needs to fix his problem and also provides a treatment, price discrimination proceeds along the dimension of quality of advice offered. High quality advice and appropriate treatment is providid to the most profitable market segment only. Less profitable consumers are induced to demand either unnecessary or insufficient procedures. The welfare consequences of price discrimination are ambiguous: On the one hand, price discrimination increases the number of consumers that get an intervention. On the other hand, some consumers that are efficiently served under nondiscrimination get the wrong procedure if the expert can discriminate among customers.

Suggested Citation

  • Uwe Dulleck & Rudolf Kerschbamer, 2003. "Price Discrimination in Markets for Experts´ Services," Vienna Economics Papers vie0312, University of Vienna, Department of Economics.
    • Handle: RePEc:vie:viennp:vie0312
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General

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