Behaviour Based Price Discrimination with Cross-Group Externalities

This paper analyses the practice of firms to offer different prices to consumers according to the past purchase behaviour (BBPD) in the context of two-sided markets. In a two-period model, two platforms compete for heterogeneous firms and consumers. Platforms are allowed to discriminate prices on the consumers’ side according to their past purchase behaviour. When first-period market shares are taken as given, the presence of exter- nalities makes two-direction switching less likely compared to the case of a one-sided market. Second-period competition is strengthened compared to the case in which a uniform price is charged in both sides, whereas in the first period it is relaxed if firms exhibit weaker externalities than consumers, intensified otherwise. The overall effect on inter-temporal profits of platforms is negative, confirming the previous results of BBPD literature.