The welfare effects of group and personalized pricing in markets with multi-unit buyers with a decreasing disutility cost in consumption

• Autor(a) principal: Esteves, Rosa Branca
• Data de Publicação: 2022
• Tipo de documento: Artigo
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: https://hdl.handle.net/1822/79680
• topic: Ciências Sociais::Economia e Gestão

This paper assesses the welfare effects of firms´ability to use data for group and personalized pricing in markets with unit (q = 1) and multi-unit demand consumers (q > 1). The "disutility cost" of not consuming the ideal good is a function of units purchased and can increase at a decreasing rate β Ꞓ [0,1] as consumption increases ( β is the elasticity of the disutility cost with respect to q): Group pricing (GP) and personalized pricing (PP) are compared to uniform pricing (UP). GP always boosts profits at the expense of consumers. When β = 0,PP reduces industry profits and boosts consumer welfare. The same happens when q is low and/or β is sufficiently high. In contrast, if heterogeneity in demand is sufficiently high and is sufficiently low, PP can enhance profits at the expense of consumer welfare.