DP12034-2 | Intertemporal Price Discrimination with Multiple Products

Publication Date

10/29/2018

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Abstract

We study the multiproduct monopoly profit maximisation problem for a seller who can commit to a dynamic pricing strategy. We show that if consumers' valuations are not strongly-ordered then optimality for the seller can require intertemporal price discrimination which can be implemented by a marketing strategy known as ``dynamic pricing on the cross-sell.'' For general valuations we establish a sufficient condition for such dynamic pricing to be more profitable than mixed bundling. So we show that the Stokey (1979) no-discrimination-across-time result does not extend to multiple good sellers when consumers' valuations are drawn from standard distributions such as the tilted uniform, the shifted uniform, the exponential, or the normal.