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Income Dispersion And Price Discrimination

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Author Info

  • Yong He
  • Guang-Zhen Sun

Abstract

This paper analyses the effects of inter-market and intra-market income heterogeneities on output and social welfare under uniform pricing and differential pricing regimes by considering a finite number of markets. We first derive the linear demand curve in each market under plausible conditions, and then show that more markets (and consumers) are excluded under uniform pricing the higher are the inter-market income differences. We also show that adding markets, even of lower income levels than those of existing markets, helps to decrease prices and thus cause more markets to be served. Implications of intra-market income dispersion are also explored. Copyright 2006 Blackwell Publishing Ltd

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Pacific Economic Review.

Volume (Year): 11 (2006)
Issue (Month): 1 (02)
Pages: 59-74

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Handle: RePEc:bla:pacecr:v:11:y:2006:i:1:p:59-74

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=1361-374X

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Cited by:
  1. Yann Braouezec, 2013. "The Welfare Effects of Regulating the Number of Market Segments," Working Papers 2013-ECO-11, IESEG School of Management.

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