【 The Digital Star Seminar Series No.23 】Behavior-based Pricing and Signaling of Product Quality

Date: 16 Sep 2022 (Fri) 
Time: 3:00pm - 4:30pm (Hong Kong Time, UTC+8)
Platform: Tencent Meeting (ID 864-913-526)

Host: Prof. Miaojun Wang (School of Economics, Zhejiang University)

Presenter: Prof. Jianpei Li (The University of International Business and Economics)

Abstract：

The literature shows paradoxically that the widely-used practice of behavior-based pricing (BBP) is typically inferior to uniform pricing for a monopoly seller. We analyze the profitability of BBP in a setting where the monopoly seller holds private information about the quality of his product and interacts with the consumers in two periods. Relative to uniform pricing, BBP increases the consumers' sensitivity to a first-period price change and leads to a larger demand reduction when low-quality seller imitates the price choice of high-quality seller. Consequently, BBP lowers the price the high-quality seller needs to set to separate himself from a low-quality seller, decreases the signaling cost of high-quality product, and becomes a potentially profitable strategy both when the seller can and cannot commit to future prices. Moreover, the benefits to the seller do not come at the expense of the consumers because the average price is lower with BBP and consumer surplus also increases. In the separating equilibria that survive the intuitive criterion, the price pattern of high-quality product when BBP is allowed exhibits first-purchase discount that is widely observed in practice.

Intro to the Presenter:

Jianpei Li, Professor of University of international business and economics. She is mainly engaged in the research of industrial organization theory and contract theory. Her research topics include Championship mechanism in team production, design of optimal procurement contract, design of tort liability in expert market, differential pricing, etc. Many papers have been published in international top journals of economics, including RAND Journal of Economics, Journal of Economic Theory, Journal of Public Economics，International Economic Review, International Journal of Industrial Organization，Social Choice and Welfare. She has successively presided over the youth program of the National Natural Science Foundation of China and the basic research program of Fok Ying Tung Education Foundation. She was selected into the New Century Excellent Talents Program of the Ministry of Education and won the Wujiapei award of China Information Economics in 2018.

Organization：

- The Chinese University of Hong Kong-Zhejiang University Joint Research Center for Digital Economy

- China Digital Economy Research Center of School of Economics, Zhejiang University

- Zhejiang University Digital Economy Innovation Research Team

Intro to The Digital Star Seminar Series：

The Digital Star Seminar Series is co-hosted by the China Digital Economy Research Center of School of Economics, Zhejiang University, and the Chinese University of Hong Kong-Zhejiang University Joint Research Center for Digital Economy. This series of seminars will study the development of the digital economy and China's economic transformation based on the practice of China's digital transformation. We will invite domestic and overseas scholars to share and discuss the latest research on the digital economy and the Chinese economy. We hope that this academic platform can become a paradise for the study of the digital economy. More importantly, it can generate insights that significantly impact the digital economy and Chinese economy, which will help promote digital transformation and high-quality economic development in Chinese society.