Discussion paper

DP12034 Intertemporal Price Discrimination with Two Products

We study the two-product monopoly profit maximisation problem for a seller who can commit to a dynamic pricing strategy. We show that if consumers' valuations are not strongly-ordered then optimality for the seller can require intertemporal price discrimination: the seller offers a choice between supplying a complete bundle now, or delaying the supply of a component of that bundle until a later date. For general valuations we establish a sufficient condition for such dynamic pricing to be more profitable than mixed bundling. So we show that the Stokey (1979) no-discrimination-across-time result does not extend to two-product sellers when consumers' valuations are drawn from many standard distributions.


Thanassoulis, J and J Rochet (2017), ‘DP12034 Intertemporal Price Discrimination with Two Products‘, CEPR Discussion Paper No. 12034. CEPR Press, Paris & London. https://cepr.org/publications/dp12034