Pricing Strategies with Costly Customer Arbitrage

B-Tier
Journal: Review of Industrial Organization
Year: 2017
Volume: 50
Issue: 3
Pages: 345-366

Authors (1)

Score contribution per author:

2.011 = (α=2.01 / 1 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Abstract A monopolist’s ability to conduct non-linear pricing is limited because customers can, at a cost, unbundle bundled output. Three pricing strategies are available to a firm: (1) a separating strategy; (2) a pooling strategy; and (3) an exclusion strategy. Each is optimal for some set of unbundling cost and distribution of customer types. The optimal pricing strategies are contrasted with the well-studied benchmark cases, in which unbundling costs are either zero or arbitrarily high. It is shown that it is not always possible to extrapolate the conclusions from the benchmark cases with respect to pricing, profitability, consumer surplus or efficiency.

Technical Details

RePEc Handle
repec:kap:revind:v:50:y:2017:i:3:d:10.1007_s11151-016-9533-0
Journal Field
Industrial Organization
Author Count
1
Added to Database
2026-01-29