This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. Journals
  3. American Economic Journal: Microeconomics
  4. Forthcoming Articles
  5. (Reverse) Price Discrimination with Information Design

(Reverse) Price Discrimination with Information Design

  • Dong Wei
  • Brett Green
American Economic Journal: Microeconomics (Forthcoming)

Abstract

A monopolistic seller is marketing a good to a customer whose willingness to pay is determined by his private type and a “quality” component. The seller can design individualized selling mechanisms and experiments—that reveal information about quality. We show that the optimal mechanism can be implemented by a menu of price-experiment pairs, featuring both price discrimination and information discrimination: buyers with higher private types face lower prices and receive less discerning positive signals. Moreover, we demonstrate the complementary nature of these two forms of discrimination. Overall, information design facilitates surplus creation on the extensive margin, but causes surplus destruction on the intensive margin.

Downloads