Imperfect price discrimination, market structure, and efficiency
AbstractWe introduce a flexible third-degree price discrimination framework by modeling the information firms possess about consumers' locations (preferences) on the Salop circle as a partition. Higher information quality is translated into a partition refinement. In the limit, we obtain the perfect price discrimination paradigm. We show that the free-entry equilibrium number of firms exhibits a U-shape as a function of the quality of information. This implies that price discrimination generates the most efficient free-entry outcome.
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Bibliographic InfoArticle provided by Canadian Economics Association in its journal Canadian Journal of Economics.
Volume (Year): 38 (2005)
Issue (Month): 4 (November)
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Postal: Canadian Economics Association Prof. Steven Ambler, Secretary-Treasurer c/o Olivier Lebert, CEA/CJE/CPP Office C.P. 35006, 1221 Fleury Est Montréal, Québec, Canada H2C 3K4
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- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
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- L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
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- Bouckaert J. & Degryse H., 2007.
"Opt In versus Opt Out: A Free-Entry Analysis of Privacy Policies,"
2007025, University of Antwerp, Faculty of Applied Economics.
- Bouckaert, J.M.C. & Degryse, H.A., 2006. "Opt in Versus Opt out: A Free-Entry Analysis of Privacy Policies," Discussion Paper 2006-024, Tilburg University, Tilburg Law and Economic Center.
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