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Spatial Pricing Policies Reconsidered: Monopoly Performance and Location

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  • Lin‐Ti Tan

Abstract

This paper reexamines the welfare implications of three pricing regimes (mill, uniform, and discriminatory) for a monopoly. Assuming linear demand and constant marginal costs, I show that with the introduction of endogenous location choice, uniform delivered pricing may provide the highest social welfare when demands in different markets are sufficiently heterogeneous; whereas discriminatory pricing always dominates uniform pricing when demands in different markets are similar.

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  • Lin‐Ti Tan, 2001. "Spatial Pricing Policies Reconsidered: Monopoly Performance and Location," Journal of Regional Science, Wiley Blackwell, vol. 41(4), pages 601-615, November.
    • Handle: RePEc:bla:jregsc:v:41:y:2001:i:4:p:601-615
    DOI: 10.1111/0022-4146.00234
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    Cited by:

    1. Doriani Lingga & Damiana Simanjuntak, 2022. "Location Choice of a Partially–Private Monopoly Supplier," Studies in Microeconomics, , vol. 10(1), pages 106-121, June.
    2. Fay, Scott & Xie, Jinhong & Feng, Cong, 2015. "The Effect of Probabilistic Selling on the Optimal Product Mix," Journal of Retailing, Elsevier, vol. 91(3), pages 451-467.
    3. Ziying Yang & Félix Muñoz-García, 2018. "Can Banning Spatial Price Discrimination Improve Social Welfare?," Journal of Industry, Competition and Trade, Springer, vol. 18(2), pages 223-243, June.
    4. Yeung-Nan Shieh, 2010. "The implications of quantity discounted transportation rates on output effect of spatial price discrimination," Letters in Spatial and Resource Sciences, Springer, vol. 3(2), pages 71-77, July.
    5. Stefano Colombo & Arijit Mukherjee, 2023. "Location of Firms and Outsourcing," Games, MDPI, vol. 14(6), pages 1-20, October.
    6. Gunther Maier, 2009. "Spatial prices, search behavior and location," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 43(1), pages 27-48, March.
    7. repec:bla:jregsc:v:44:y:2004:i:3:p:489-515:1 is not listed on IDEAS
    8. Zhang, Yue, 2015. "Designing a retail store network with strategic pricing in a competitive environment," International Journal of Production Economics, Elsevier, vol. 159(C), pages 265-273.

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