Abstract
As the collection of consumer data becomes more common, online merchants are better equipped to price discriminate now more than ever before. While the standard use of first-degree price discrimination benefits merchants and harms consumers relative to uniform pricing, I derive an alternative first-degree pricing strategy that achieves efficiency and Pareto improves upon the uniform pricing equilibrium. Furthermore, I show that price ceilings can enforce these Pareto price discrimination strategies, making Pareto price discrimination a viable option for merchants and policy makers.
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