Third-degree price discrimination, quality choice, and welfare
AbstractEmploying an endogenous quality choice model, we reconsider the effect on welfare of monopolistic third-degree price discrimination. We prove that price discrimination always enhances welfare, mainly because the quality improvement owing to price discrimination increases consumer surplus. Moreover, we show that third-degree price discrimination benefits all parties, including consumers in the higher priced market if the preference differences between markets are sufficiently large.
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.
Bibliographic InfoArticle provided by Elsevier in its journal Economics Letters.
Volume (Year): 106 (2010)
Issue (Month): 1 (January)
Contact details of provider:
Web page: http://www.elsevier.com/locate/ecolet
Third-degree price discrimination Endogenous quality choice Vertically differentiated products Monopoly;
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.:
- Schwartz, Marius, 1990. "Third-Degree Price Discrimination and Output: Generalizing a Welfare Result," American Economic Review, American Economic Association, vol. 80(5), pages 1259-62, December.
- Thisse, J.-F. & Vives, X., 1987.
"On the strategic choice of spatial price policy,"
CORE Discussion Papers
1987008, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Takeshi Ikeda & Tatsuhiko Nariu, 2009. "Third-Degree Price Discrimination in the Presence of Asymmetric Consumption Externalities," Journal of Industry, Competition and Trade, Springer, vol. 9(3), pages 251-261, September.
- Malueg, David A. & Schwartz, Marius, 1994.
"Parallel imports, demand dispersion, and international price discrimination,"
Journal of International Economics,
Elsevier, vol. 37(3-4), pages 167-195, November.
- Malueg, D.A. & Schwartz, M., 1993. "Parallel Imports, Demand Dispersion and International Price Discrimination," Papers 93-6, U.S. Department of Justice - Antitrust Division.
- Liu, Qihong & Serfes, Konstantinos, 2005. "Imperfect price discrimination in a vertical differentiation model," International Journal of Industrial Organization, Elsevier, vol. 23(5-6), pages 341-354, June.
- Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
- Varian, Hal R, 1985. "Price Discrimination and Social Welfare," American Economic Review, American Economic Association, vol. 75(4), pages 870-75, September.
- 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.
- 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.
- 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.
- Ann Marsden & Hugh Sibly, 2011. "An Integrated Approach to Teaching Price Discrimination," International Review of Economic Education, Economics Network, University of Bristol, vol. 10(2), pages 75-90.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wendy Shamier).
If references are entirely missing, you can add them using this form.