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2 - The Economics of Price Personalization

Theory and Evidence*

from Part I - Understanding the Phenomenon

Published online by Cambridge University Press:  20 March 2025

By
Pedro Brinca ,
João Ricardo Costa Filho  and
Luis F. Martinez
Edited by
Fabrizio Esposito  and
Mateusz Grochowski
Fabrizio Esposito
Affiliation:
NOVA Law School (Portugal)
Mateusz Grochowski
Affiliation:
Tulane University, Louisiana
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Summary

What’s the price of your product? In the past, one would probably assume that by your we mean the product you are selling. With the advent of massive information regarding prospective consumers, we are approaching an era in which your is more likely to stand for the product you are buying.

Firms want to maximize profits, and if they are constrained to charge a single price for every potential consumer, they might leave money on the table. However, if a customer reveals her willingness to pay (the key concept in this chapter), sellers may charge different prices to different people for the same goods or services.

Keywords

consumer surplusconsumer welfarereservation priceprice discriminationprice personalization
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Chapter
Information
The Cambridge Handbook of Algorithmic Price Personalization and the Law , pp. 50 - 64
Publisher: Cambridge University Press
Print publication year: 2025

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