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Price discrimination in service industries |
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| Authors: | Anja Lambrecht Katja Seim Naufel Vilcassim Amar Cheema Yuxin Chen Gregory S. Crawford Kartik Hosanagar Raghuram Iyengar Oded Koenigsberg Robin Lee Eugenio J. Miravete Ozge Sahin |
| Affiliation: | 1. London Business School, London, UK 2. Wharton School, University of Pennsylvania, Philadelphia, PA, USA 3. University of Virginia, Charlottesville, VA, USA 4. Northwestern University, Evanston, IL, USA 5. University of Warwick, Coventry, UK 6. London Business School, London, UK 7. Stern School of Business, New York University, New York, NY, USA 8. University of Texas at Austin & CEPR, Austin, TX, USA 9. Carey Business School, Johns Hopkins University, Baltimore, MD, USA |
| Abstract: | This article outlines recent methods and applications directed at understanding the profit and consumer welfare implications of increasingly prevalent price discrimination strategies in the service sector. These industries are typically characterized by heterogeneity in consumers?? valuation and usage of the service, resale constraints, and a focus on price as the service??s key attribute. The article focuses on how firms use nonlinear pricing or bundling strategies to benefit from the heterogeneity in consumer demand. We describe the basic economic model commonly used in the literature to analyze such strategic choices and present recent methodological improvements to this benchmark. A discussion of existing applications and future research opportunities concludes the article. |
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