Informing Consumers about their own Preferences

Preview

PDF (ECON 12-7)
Sammelmappe7.pdf - Published
Download (335kB)

URL:	https://ub-madoc.bib.uni-mannheim.de/31325
URN:	urn:nbn:de:bsz:180-madoc-313251
Document Type:	Working paper
Year of publication:	2012
The title of a journal, publication series:	Working Paper Series
Volume:	12-07
Place of publication:	Mannheim
Publication language:	English
Institution:	School of Law and Economics > Industrieökonomik, Wettbewerbspolitik u. Regulierung (Peitz 2007-)
MADOC publication series:	Department of Economics > Working Paper Series
Subject:	330 Economics
Classification:	JEL: D42 , D82 , L12,
Keywords (English):	Nonlinear pricing , price discrimination , monopolistic screening , information acquisition
Abstract:	We analyze a model of monopolistic price discrimination where only some consumers are originally sufficiently informed about their preferences, e.g., about their future demand for a utility such as electricity or telecommunication. When more consumers become informed, we show that this benefits also those consumers who remain uninformed, as it reduces the firm’s incentives to extract information rent. By reducing the costs of information acquisition or forcing firms to supply consumers with the respective information about past usage, policy can further improve welfare, as contracts become more efficient. The last observation stands in contrast to earlier findings by Crémer and Khalil (American Economic Review 1992), where all consumers are uninformed.