Competition and price discrimination in the market for mailing lists |
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Authors: | Ron Borzekowski Raphael Thomadsen Charles Taragin |
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Institution: | (1) Federal Reserve Board, 20th & C Street NW, Washington, DC, 20551, USA;(2) UCLA Anderson School of Management, 110 Westwood Plaza, Suite B411, Los Angeles, CA 90095-1481, USA;(3) U.S. Department of Justice, 600 E Street NW, Suite 10000, Washington, DC, 20004, USA |
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Abstract: | This paper examines whether mailing list sellers, when faced with additional competitors, are more likely to try to segment
consumers by offering additional choices at different prices (second-degree price discrimination) and/or offering different
prices to readily identifiable groups of consumers (third-degree price discrimination). We utilize a dataset that includes
information about all consumer response lists derived from mail order buyers (i.e. lists derived from catalogs) available
for rental in 1997 and 2002. Our results indicate that increased competition leads to an increased propensity to price discriminate
along each of the dimensions we investigate. These results hold for both second-degree and third-degree price discrimination.
Further, list owners offer menus with more choices in more competitive markets. These results, taken together with results
from other empirical studies, suggest that the connection between competition and increased price discrimination is a result
that applies broadly.
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Keywords: | Price discrimination Competition Direct marketing Segmentation |
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