Behavior-based price discrimination with retention offers

Abstract

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Does Behaviour‐based Price Discrimination Foster Firms’ Differentiation?

“…For example, a widely explored issue in the literature is whether, and under what conditions, BBPD is profitable for the firms (see for instance Villas‐Boas, and ; Fudenberg and Tirole, ; Chen and Zhang, ; Shin and Sudhir, ; and Colombo, ). Other papers consider the impact of switching costs (Chen, ; Taylor, , and Chen and Pearcy, ), while other investigations consider the use of retention offers (Esteves, ) and the exchange of information between firms (Shy and Stenbacka, )…”

Behavior‐ and characteristic‐based price discrimination

“…Common examples of firms operating in various industries that price discriminate across consumers on the basis of their purchase histories are for example Sky, Amazon, Barners and Nobles, Digg, eBay, iTunes, Netflix, YouTube, Air Canada, Societè Nanceienne Varin‐Bernier Bank, Scandinavian Airlines, and Le Monde, to name a few (see also Esteves, , ; Mahmood, ; Pazgal & Soberman, for other examples).…”

Anti‐poaching Agreements in Labor Markets

“…This literature includes, for example, Chen (), Fudenberg and Tirole (), Gehrig, Shy, and Stenbacka (), Esteves () and it is surveyed in Fudenberg and Villas‐Boas () and Esteves ().…”

“…Esteves () analyzes behavior‐based price discrimination in product markets under circumstances where firms are able to apply retention offers in order to deter their customers from accepting poaching offers from rivals.…”