Strategic loyalty reward in dynamic price Discrimination
Pre-print, Working paper: This paper proposes a dynamic model of duopolistic competition under behaviorbased price discrimination with the following property: in equilibrium, a firm may reward its previous customers although long term contracts are not enforceable. A firm can offer a lower price to its previous customers than to its new customers as a strategic means to hamper its rival to gather precise information on the young generation of customers for subsequent profitable behavior-based pricing. The result holds both with myopic and forward-looking, impatient enough consumers.
Keywords JEL
Keywords
- Price discrimination
- Dynamic pricing
- Loyalty reward
Internal reference
- PSE Working Papers n°2011-29
URL of the HAL notice
Version
- 1