Behavior-based price discrimination and customer information sharing

- I examine behavior-based price discrimination (BBPD) with information sharing.
- Information sharing occurs in a subgame perfect equilibrium.
- Information sharing boosts the profitability of BBPD at the expense of consumers.

This article investigates the incentives and effects of rival firms sharing their customers' identities, using a two-period model with behavior-based price discrimination (BBPD). A unilateral information exchange between the two periods takes place in a subgame-perfect equilibrium. This exchange increases the ability of the firms to discriminate prices amongst consumers according to their profiles, and boosts the profitability of BBPD at the customers' expense.