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Identifier to cite or link to this item: https://hdl.handle.net/10086/30919

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Title
The Curse of Knowledge: Having Access to Customer Information Can be Detrimental to Monopoly’s Profit
Creator
Creator Name
Laussel, Didier Laussel, Didier
Affiliation
Affiliation Name
Aix-Marseilles University
Creator Name
Long, Ngo Van Long, Ngo Van
Affiliation
Affiliation Name
McGill University
Affiliation
Affiliation Name
Hitotsubashi University
Creator Name
Resende, Joana Resende, Joana
Affiliation
Affiliation Name
University of Porto
Editor
Contributor Name
Hitotsubashi Institute for Advanced Study, Hitotsubashi University
Key Word
curse of knowledge
customers information
intertemporal price discrimination
Coase conjecture
price personalization
JEL
L12
L15
Abstract
We show that a monopolist's profit is higher if he refrains from collecting coarse information on his customers, sticking to constant uniform pricing rather than recognizing customers' segments through their purchase history. In the Markov-perfect equilibrium with coarse information collection, after each commitment period, a new introductory price is offered to attract new customers, creating a new market segment for price discrimination. Eventually, the whole market is covered. Shortening the commitment period results in lower profits. These results sharply differ from the ones obtained when the firm can uncover the exact willingness-to-pay of each previous customer.
Publisher
Hitotsubashi Institute for Advanced Study, Hitotsubashi University
Issued Date
2019-12
Language
English(eng)
Resource Type
technical report
Version Type
VoR
Is Part OfRelation -
Related Title
Discussion paper series ; No. HIAS-E-93
Number of Pages
43
Appears in Collections
Discussion paper series / Hitotsubashi Institute for Advanced Study, Hitotsubashi University
URL
https://hdl.handle.net/10086/30919