Third-Degree Price Discrimination with Interdependent Demands
AbstractThis paper analyzes the price, output, and welfare effects of third-degree price discrimination for a monopolist who sells in two interdependent markets. The case where the two goods sold by the monopolist are complements is analyzed as well as the more typical case where the two goods are substitutes. The economic effects of price discrimination are shown to depend on the type and strength of demand interdependence, the curvature of the demands, and the slope of marginal cost. The circumstances under which price discrimination causes both market prices to either rise or fall are also analyzed. Copyright 1998 by Blackwell Publishing Ltd
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Journal of Industrial Economics.
Volume (Year): 46 (1998)
Issue (Month): 4 (December)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821
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- Edward Lopez & David Molina, 2010. "Third-Degree Price Discrimination: Apology Not Necessary," Atlantic Economic Journal, International Atlantic Economic Society, vol. 38(4), pages 383-397, December.
- Chen, Yongmin & Schwartz, Marius, 2012. "Beyond price discrimination: welfare under differential pricing when costs also differ," MPRA Paper 43393, University Library of Munich, Germany.
- Mahmudul Anam & Shin-Hwan Chiangy, 1999. "Price Discrimination and Social Welfare with Demand Uncertainty," Working Papers 1999_04, York University, Department of Economics.
- Bertoletti, Paolo, 2005. "Uniform pricing and social welfare," MPRA Paper 1082, University Library of Munich, Germany.
- Takanori Adachi & Noriaki Matsushima, 2011.
"The Welfare Effects of Third-Degree PriceDiscrimination in a Differentiated Oligopoly,"
KIER Working Papers
800, Kyoto University, Institute of Economic Research.
- Takanori Adachi & Noriaki Matsushima, 2011. "The Welfare Effects of Third-Degree Price Discrimination in a Differentiated Oligopoly," ISER Discussion Paper 0800, Institute of Social and Economic Research, Osaka University.
- Yongmin Chen and Marius Schwartz, 2013. "Differential Pricing When Costs Differ: A Welfare Analysis," Working Papers gueconwpa~13-13-01, Georgetown University, Department of Economics.
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