Price Discrimination in the Digital Economy

With the developments in information technology firms have more detailed digital information about their prospective and previous customers, which provides new mechanisms for price discrimination. In particular, when firms have information about consumers’ previous buying behavior, they may be able to use this information to offer different prices and/or products to consumers with different purchase histories. This article discusses the effects of price discrimination based on more detailed customer information under monopoly and competition. * This chapter is forthcoming in the Oxford Handbook of the Digital Economy, edited by Martin Peitz and Joel Waldfogel.

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