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Price discrimination in service industries


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.

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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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
03 Faculty of Economics > UBS International Center of Economics in Society
Dewey Decimal Classification:330 Economics
Scopus Subject Areas:Social Sciences & Humanities > Business and International Management
Social Sciences & Humanities > Economics and Econometrics
Social Sciences & Humanities > Marketing
Uncontrolled Keywords:Marketing, economics and econometrics, business and international management, nonlinear pricing, bundling, service industries
Language:English
Date:1 June 2012
Deposited On:26 Sep 2019 08:20
Last Modified:31 Jul 2020 03:40
Publisher:Springer
ISSN:0923-0645
OA Status:Closed
Publisher DOI:https://doi.org/10.1007/s11002-012-9187-0

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