Price Discrimination in the Digital Economy

Drew Fudenberg and J. Miguel Villas-Boas

in The Oxford Handbook of the Digital Economy

Published in print August 2012 | ISBN: 9780195397840
Published online November 2012 | | DOI:

Series: Oxford Handbooks

Price Discrimination in the Digital Economy

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  • Economics
  • Economic Development and Growth



This article addresses the effects of price discrimination that is based on more detailed customer information, both under monopoly and under competition. The activities of the firms, namely using information gained from consumers through their purchase decisions, raise the possibility that consumers may understand that the decisions which they take may impact the options that they will have available in the future periods. It is noted that competing firms can potentially gain more from learning the valuation of consumers than not learning, which could be a force for greater competition for consumers. In some markets, firms learn consumer characteristics that directly influence the cost of servicing them. For situations with competition, if the competitors are aware that firms have purchase history information, more information may actually result in more intense competition after the information is gained.

Keywords: price discrimination; customer information; monopoly; competition; competing firms; consumers

Article.  9055 words. 

Subjects: Economics ; Economic Development and Growth

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