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Competition and price discrimination in the market for mailing lists
Authors:Ron Borzekowski  Raphael Thomadsen  Charles Taragin
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
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.
Contact Information Raphael ThomadsenEmail:
Keywords:Price discrimination  Competition  Direct marketing  Segmentation
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