Open Access. Powered by Scholars. Published by Universities.®

Other Economics Commons

Open Access. Powered by Scholars. Published by Universities.®

Articles 1 - 2 of 2

Full-Text Articles in Other Economics

Price Discrimination In Service Industries, Anja Lambrecht, Katja Seim, Naufel Vilcassim, Amar Cheema, Yuxin Chen, Gregory S. Crawford, Kartik Hosanagar, Raghuram Iyengar, Oded Koenigsberg, Robin Lee, Eugenio J. Miravete, Ozge Sahin Jun 2012

Price Discrimination In Service Industries, Anja Lambrecht, Katja Seim, Naufel Vilcassim, Amar Cheema, Yuxin Chen, Gregory S. Crawford, Kartik Hosanagar, Raghuram Iyengar, Oded Koenigsberg, Robin Lee, Eugenio J. Miravete, Ozge Sahin

Operations, Information and Decisions Papers

This article outlines recent methods and applications directed at understanding the profit and consumer welfare implications of increasingly prevalent price discrimination strategies in the service sector. These industries are typically characterized by heterogeneity in consumers’ valuation and usage of the service, resale constraints, and a focus on price as the service’s key attribute. The article focuses on how firms use nonlinear pricing or bundling strategies to benefit from the heterogeneity in consumer demand. We describe the basic economic model commonly used in the literature to analyze such strategic choices and present recent methodological improvements to this benchmark. A discussion ...


Bundling With Customer Self-Selection: A Simple Approach To Bundling Low-Marginal-Cost Goods, Lorin. M. Hitt, Pei-Yu Chen Oct 2005

Bundling With Customer Self-Selection: A Simple Approach To Bundling Low-Marginal-Cost Goods, Lorin. M. Hitt, Pei-Yu Chen

Operations, Information and Decisions Papers

With declining costs of distributing digital products comes renewed interest in strategies for pricing goods with low marginal costs. In this paper, we evaluate customized bundling, a pricing strategy that gives consumers the right to choose up to a quantity M of goods drawn from a larger pool of N different goods for a fixed price. We show that the complex mixed-bundle problem can be reduced to the customized-bundle problem under some commonly used assumptions. We also show that, for a monopoly seller of low marginal cost goods, this strategy outperforms individual selling (M = 1) and pure bundling (M = N ...