FSS-DECO Seminar: Price Discrimination and Quality Signaling
Speaker: Prof. Bin CHEN, Professor, School of Economics, Huazhong University of Science and Technology, China
Date: 25 March 2026 (Wednesday)
Time: 14:00-15:15
Venue: E21B-G002
Language: English
Abstract: We examine the interplay between two fundamental roles of price—surplus extraction and quality signaling—and explore how they are shaped by the seller’s information acquisition about buyers’ preferences. A seller with uncertain quality can gather information about her buyer and set prices accordingly. Unlike standard price discrimination without signaling, both profit and efficiency can increase with less information acquisition. The equilibrium information policy that optimally balances surplus extraction and signaling leads to quasi-perfect price discrimination: the buyer purchases at a price equal to his value if and only if his type exceeds a threshold. Furthermore, higher-quality sellers acquire less buyer information.
