DYNAMIC PRICE DISCRIMINATION WITH ASYMMETRIC FIRMS*

YONGMIN CHEN
2008 Journal of Industrial Economics  
This paper considers variants of a dynamic duopoly model where one ...rm has a stronger market position than its competitor. Consumers'past purchases may reveal their di¤erent valuations due to preference diversity and possibly also to the cost of switching suppliers. Price discrimination based on purchase histories tends to bene...t consumers if it does not cause the weaker ...rm to exit; otherwise it can harm consumers. The e¤ect of price discrimination also depends on ...rms' cost
more » ... market competitiveness, and consumers' time horizon. The stronger ...rm may price below cost in the presence of consumer switching costs, with the purpose and e¤ect of eliminating competition.
doi:10.1111/j.1467-6451.2008.00362.x fatcat:7cxz5excr5ezfbppwg75c4qidq