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Optimal pricing scheme for addictive goods.

This article analyses how consumers' habit formation and addiction affect firms' pricing policies. I consider both sophisticated consumers, who realize that their current consumption will affect future tastes, and "naive" consumers, who do not. The optimal contract for sophisticated consumers is a t...

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Published in:RAND Journal of Economics (Wiley-Blackwell) Vol. 55; no. 4; pp. 603 - 627
Main Author: Triviza, Eleftheria
Format: Article
Published: Wiley-Blackwell Dec2024
Subjects:
Prices
Information asymmetry
Consumer education
Direct costing
Marginal pricing
Online Access:View this record in EBSCOhost