Third-Degree Price Discrimination and Consumer Surplus
AbstractThis paper presents simple conditions for monopoly third-degree price discrimination to have negative or positive effects on aggregate consumer surplus.ï¿½ Consumer surplus is often reduced by discrimination, for example when total welfare (consumer surplus and profits) falls.ï¿½ Surplus increases with discrimination, however, in two cases: first, when the marginal revenues without discrimination are close together and inverse demand in the market where the price will fall with discrimination is more convex; second, when inverse demand functions are highly convex and the discriminatory prices are close together.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Wiley Blackwell in its journal The Journal of Industrial Economics.
Volume (Year): 60 (2012)
Issue (Month): 2 (06)
Contact details of provider:
Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821
Other versions of this item:
- Simon GB Cowan & Simon Cowan, 2009. "Third-Degree Price Discrimination and Consumer Surplus," Economics Series Working Papers 462, University of Oxford, Department of Economics.
- D42 - Microeconomics - - Market Structure and Pricing - - - Monopoly
- L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Holmes, Thomas J, 1989. "The Effects of Third-Degree Price Discrimination in Oligopoly," American Economic Review, American Economic Association, vol. 79(1), pages 244-50, March.
- Armstrong, Mark, 2006. "Price discrimination," MPRA Paper 4693, University Library of Munich, Germany.
- Armstrong, Mark & Vickers, John, 2001. "Competitive Price Discrimination," RAND Journal of Economics, The RAND Corporation, vol. 32(4), pages 579-605, Winter.
- T. Beard & Michael Stern, 2008. "Bounding consumer surplus by monopoly profits," Journal of Regulatory Economics, Springer, vol. 34(1), pages 86-94, August.
- Bulow, Jeremy I. & Klemperer, Paul, 2009.
"Price Controls and Consumer Surplus,"
CEPR Discussion Papers
7412, C.E.P.R. Discussion Papers.
- Paul Klemperer & Jeremy Bulow, 2009. "Price Controls and Consumer Surplus," Economics Series Working Papers 2009-W07, University of Oxford, Department of Economics.
- Bulow, Jeremy & Klemperer, Paul, 2011. "Price Controls and Consumer Surplus," Research Papers 2086, Stanford University, Graduate School of Business.
- Jeremy Bulow & Paul Klemperer, 2009. "Price Controls and Consumer Surplus," Economics Papers 2009-W07, Economics Group, Nuffield College, University of Oxford.
- Malueg, David A. & Snyder, Christopher M., 2006. "Bounding the relative profitability of price discrimination," International Journal of Industrial Organization, Elsevier, vol. 24(5), pages 995-1011, September.
- Dirk Bergemann & Benjamin Brooks & Stephen Morris, 2013.
"The Limits of Price Discrimination,"
Cowles Foundation Discussion Papers
1896R, Cowles Foundation for Research in Economics, Yale University, revised Jul 2013.
- Dirk Bergemann & Benjamin A. Brooks & Stephen Morris, 2013. "The Limits of Price Discrimination," Levine's Working Paper Archive 786969000000000776, David K. Levine.
- Dirk Bergemann & Benjamin Brooks & Stephen Morris, 2013. "The Limits of Price Discrimination," Cowles Foundation Discussion Papers 1896, Cowles Foundation for Research in Economics, Yale University.
- Dirk Bergemann & Benjamin Brooks & Stephen Morris, 2013. "The Limits of Price Discrimination," Cowles Foundation Discussion Papers 1896RR, Cowles Foundation for Research in Economics, Yale University, revised Apr 2014.
- E. Glen Weyl & Michal Fabinger, 2013. "Pass-Through as an Economic Tool: Principles of Incidence under Imperfect Competition," Journal of Political Economy, University of Chicago Press, vol. 121(3), pages 528 - 583.
- Chen, Yongmin & Schwartz, Marius, 2012. "Beyond price discrimination: welfare under differential pricing when costs also differ," MPRA Paper 43393, University Library of Munich, Germany.
- Francisco Galera & José Luis Álvarez & Juan Carlos Molero, 2012. "Technology Choice and Third Degree Price Discrimination in a Monopoly," Faculty Working Papers 15/12, School of Economics and Business Administration, University of Navarra.
- Adachi, Takanori & Ebina, Takeshi, 2014. "Double marginalization and cost pass-through: Weyl–Fabinger and Cowan meet Spengler and Bresnahan–Reiss," Economics Letters, Elsevier, vol. 122(2), pages 170-175.
- Aguirre Pérez, Iñaki, 2011. "Welfare Effects of Third-Degree Price Discrimination: Ippolito Meets Schmalensee and Varian," IKERLANAK 2011-54, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
- Robert Ritz, 2013. "Price Discrimination and Limits to Arbitrage in Global LNG Markets," Cambridge Working Papers in Economics 1340, Faculty of Economics, University of Cambridge.
- Peter Neary & Monika Mrazova, 2013. "Not so demanding: Preference structure, firm behavior, and welfare," Economics Series Working Papers 691, University of Oxford, Department of Economics.
- Li, Youping, 2013. "Timing of investments and third degree price discrimination in intermediate good markets," Economics Letters, Elsevier, vol. 121(2), pages 316-320.
- 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.
- Simon GB Cowan, 2013. "Welfare-increasing third-degree price discrimination," Economics Series Working Papers 652, University of Oxford, Department of Economics.
- Aguirre Pérez, Iñaki & Cowan, Simon George, 2013. "Monopoly price discrimination with constant elasticity demand," IKERLANAK Ikerlanak;2013-74, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.