When is price discrimination profitable?

When is price discrimination profitable?

0.00 Avg rating0 Votes
Article ID: iaor200968848
Country: United States
Volume: 55
Issue: 6
Start Page Number: 980
End Page Number: 989
Publication Date: Jun 2009
Journal: Management Science
Authors: ,
Keywords: behaviour, marketing
Abstract:

We consider a general model of monopoly price discrimination and characterize the conditions under which price discrimination is and is not profitable. We show that an important condition for profitable price discrimination is that the percentage change in surplus (i.e., consumers' total willingness to pay, less the firm's costs) associated with a product upgrade is increasing in consumers' willingness to pay. We refer to this as an increasing percentage differences condition and relate it to many known results in the marketing, economics, and operations management literatures.

Reviews

Required fields are marked *. Your email address will not be published.