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Input price discrimination, pricing contract and social welfare

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  • Wang, Xingtang

Abstract

In this paper, we introduce input price discrimination into vertical product differentiation model to analyze the impact of input price discrimination on social welfare. We find that the input price discrimination improves the supply of high-quality products in the market, and lead to the increase of consumer surplus. The effect of input price discrimination on social welfare is influenced by the pricing contract of input. When the price of input is determined by upstream firm, the input price discrimination reduces social welfare. While the input price discrimination increases social welfare when the price of input is determined by bargaining of upstream and downstream firms.

Suggested Citation

  • Wang, Xingtang, 2022. "Input price discrimination, pricing contract and social welfare," Mathematical Social Sciences, Elsevier, vol. 119(C), pages 91-96.
    • Handle: RePEc:eee:matsoc:v:119:y:2022:i:c:p:91-96
    DOI: 10.1016/j.mathsocsci.2022.07.001
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    References listed on IDEAS

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