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On the Welfare Effects of Resale in the Context of a Nonlinear Pricing Schedule

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  • Lawrence J. White

Abstract

Willig has demonstrated that any uniform price unequal to marginal cost can be Pareto dominated by a nonlinear pricing schedule--in effect by a price discrimination scheme. Resale is normally considered to be antithetical to price discrimination. This note argues that limited resale can bring about a further Pareto improvement beyond that offered by the nonlinear pricing schedule. The crucial factor is that the reseller knows something that the original seller does not: his own identity and his own specific demands. There are also circumstances, however, under which resale can cause welfare to decrease.

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  • Lawrence J. White, 1982. "On the Welfare Effects of Resale in the Context of a Nonlinear Pricing Schedule," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 280-285, Spring.
    • Handle: RePEc:rje:bellje:v:13:y:1982:i:spring:p:280-285
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