Personalized Pricing and Brand Distribution

Jullien, Bruno, Reisinger, Markus and Rey, Patrick (2019) Personalized Pricing and Brand Distribution. TSE Working Paper, n. 19-995, Toulouse

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Official URL: http://tse-fr.eu/pub/122848

Abstract

This paper examines the effects of personalized pricing on brand distribution.
We explore whether a brand manufacturer prefers to sell through its own retail
outlet only (mono distribution) or through an independent retailer as well (dual
distribution). Personalized pricing allows for higher rent extraction but also leads
to more fierce intra-brand competition than does uniform pricing. Due to the latter
effect, a brand manufacturer may prefer mono distribution even if the retailer
broadens the demand of the manufacturer’s product. By contrast, with uniform
pricing, selling through both channels is always optimal. This result holds for
wholesale contracts consisting of two-part tariffs as well as for linear wholesale
tariffs. We also show that the manufacturer may obtain its largest profit in a hybrid
pricing regime, in which only the retailer charges personalized prices.
Keywords: personalized pricing, distribution channels, dual distribution, vertical
contracting, downstream competition.

Item Type: Monograph (Working Paper)
Language: English
Date: March 2019
Place of Publication: Toulouse
Uncontrolled Keywords: personalized pricing, distribution channels, dual distribution, vertical contracting, downstream competition.
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse Capitole
Site: UT1
Date Deposited: 13 Mar 2019 08:09
Last Modified: 28 Jun 2019 09:30
OAI ID: oai:tse-fr.eu:122848
URI: http://publications.ut-capitole.fr/id/eprint/32058

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