Behavior-Based Price Discrimination with Strategic Customer Targeting

Antoine Dubus (1)

1 ETH Zürich - Eidgenössische Technische Hochschule - Swiss Federal Institute of Technology [Zürich]

We analyze the impact of strategic consumer targeting on market competition in a two-period framework of behavior-based price discrimination. Strategic firms price-discriminate high-valuation customers and charge a homogeneous price to low-valuation customers, even when they have information on them. Strategic targeting questions the main results of the literature: firms do not compete for customer information acquisition and there is no consumer poaching. However, compared with information acquired from a third-party, strategic targeting using first-party data increases competition. As firms are developing sophisticated strategies based on first-party data, we argue that competition authorities should reconsider the benefits of targeting for consumers.

Mots clés: Behavior-based price discrimination; Strategic Targeting; Data collection

Domaines: Economies et finances

Antoine Dubus. Behavior-Based Price Discrimination with Strategic Customer Targeting. 2021. ⟨hal-03269586v2⟩