IDEAS home Printed from https://ideas.repec.org/a/spr/reecde/v26y2022i1d10.1007_s10058-021-00254-7.html
   My bibliography  Save this article

Monopolistic third-degree price discrimination, welfare, and vertical market structure

Author

Listed:
  • Xingtang Wang

    (Guangdong University of Foreign Studies)

  • Lin Zhang

    (Guangdong University of Foreign Studies)

Abstract

This paper reconsiders the effects of monopolistic third-degree price discrimination on welfare in a vertical market. The results indicate that monopolistic downstream third-degree price discrimination increases social welfare when the input price is determined by suppliers, regardless of whether the quality is fixed or endogenously chosen.

Suggested Citation

  • Xingtang Wang & Lin Zhang, 2022. "Monopolistic third-degree price discrimination, welfare, and vertical market structure," Review of Economic Design, Springer;Society for Economic Design, vol. 26(1), pages 75-86, March.
    • Handle: RePEc:spr:reecde:v:26:y:2022:i:1:d:10.1007_s10058-021-00254-7
    DOI: 10.1007/s10058-021-00254-7
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10058-021-00254-7
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10058-021-00254-7?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Chin-Sheng Chen, 2017. "Price Discrimination in Input Markets and Quality Differentiation," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 50(3), pages 367-388, May.
    2. Nguyen, Xuan, 2014. "Monopolistic third-degree price discrimination under vertical product differentiation," Economics Letters, Elsevier, vol. 125(2), pages 153-155.
    3. Yongmin Chen & Marius Schwartz, 2015. "Differential pricing when costs differ: a welfare analysis," RAND Journal of Economics, RAND Corporation, vol. 46(2), pages 442-460, June.
    4. Schmalensee, Richard, 1981. "Output and Welfare Implications of Monopolistic Third-Degree Price Discrimination," American Economic Review, American Economic Association, vol. 71(1), pages 242-247, March.
    5. Torben Klarl, 2018. "Complementarity of willingness to pay and cost heterogeneity under vertical product differentiation: A welfare analysis," Journal of Evolutionary Economics, Springer, vol. 28(3), pages 591-607, August.
    6. Schwartz, Marius, 1990. "Third-Degree Price Discrimination and Output: Generalizing a Welfare Result," American Economic Review, American Economic Association, vol. 80(5), pages 1259-1262, December.
    7. Varian, Hal R, 1985. "Price Discrimination and Social Welfare," American Economic Review, American Economic Association, vol. 75(4), pages 870-875, September.
    8. Stéphane Caprice, 2006. "Multilateral Vertical Contracting with an Alternative Supply: The Welfare Effects of a Ban on Price Discrimination," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 28(1), pages 63-80, February.
    9. Ikeda, Takeshi & Toshimitsu, Tsuyoshi, 2010. "Third-degree price discrimination, quality choice, and welfare," Economics Letters, Elsevier, vol. 106(1), pages 54-56, January.
    10. 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.
    11. Economides, Nicholas, 1998. "The incentive for non-price discrimination by an input monopolist," International Journal of Industrial Organization, Elsevier, vol. 16(3), pages 271-284, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wang, Xingtang, 2022. "Input price discrimination, pricing contract and social welfare," Mathematical Social Sciences, Elsevier, vol. 119(C), pages 91-96.
    2. Xingtang Wang, 2023. "Who is more aggressive under vertical product differentiation?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(1), pages 608-618, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ioannis N. Pinopoulos, 2020. "Input Price Discrimination and Upstream R&D Investments," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 57(1), pages 85-106, August.
    2. Torben Klarl, 2018. "Complementarity of willingness to pay and cost heterogeneity under vertical product differentiation: A welfare analysis," Journal of Evolutionary Economics, Springer, vol. 28(3), pages 591-607, August.
    3. Takanori Adachi & Noriaki Matsushima, 2014. "The Welfare Effects Of Third-Degree Price Discrimination In A Differentiated Oligopoly," Economic Inquiry, Western Economic Association International, vol. 52(3), pages 1231-1244, July.
    4. Youping Li, 2017. "Differential Pricing in Intermediate Good Markets," Journal of Industrial Economics, Wiley Blackwell, vol. 65(3), pages 585-596, September.
    5. Francisco Galera & Pedro Mendi & Juan Carlos Molero, 2017. "Quality Differences, Third-Degree Price Discrimination, And Welfare," Economic Inquiry, Western Economic Association International, vol. 55(1), pages 339-351, January.
    6. Herweg, Fabian & Müller, Daniel, 2010. "Price Discrimination in Input Markets: Downstream Entry and Welfare," Bonn Econ Discussion Papers 06/2010, University of Bonn, Bonn Graduate School of Economics (BGSE).
    7. Markus Dertwinkel-Kalt & Christian Wey, 2020. "Third-Degree Price Discrimination in Oligopoly When Markets Are Covered," CESifo Working Paper Series 8785, CESifo.
    8. Fabian Herweg & Daniel Müller, 2014. "Price Discrimination in Input Markets: Quantity Discounts and Private Information," Economic Journal, Royal Economic Society, vol. 124(577), pages 776-804, June.
    9. Tremblay, Mark J., 2019. "Pareto price discrimination," Economics Letters, Elsevier, vol. 183(C), pages 1-1.
    10. Aguirre Iñaki, 2016. "On the Economics of the “Meeting Competition Defense” Under the Robinson–Patman Act," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(3), pages 1213-1238, September.
    11. Kangsik Choi & DongJoon Lee & Seonyoung Lim, 2022. "A Note on Input Price Discrimination Under Bertrand Competition: Simultaneous vs. Sequential Contracting," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 61(2), pages 223-246, September.
    12. Ikeda, Takeshi & Toshimitsu, Tsuyoshi, 2010. "Third-degree price discrimination, quality choice, and welfare," Economics Letters, Elsevier, vol. 106(1), pages 54-56, January.
    13. Jeanine Miklós‐Thal & Greg Shaffer, 2021. "Input price discrimination by resale market," RAND Journal of Economics, RAND Corporation, vol. 52(4), pages 727-757, December.
    14. Brito, Duarte & Tselekounis, Markos & Vasconcelos, Helder, 2019. "Input price discrimination in the presence of downstream vertical differentiation," Economics Letters, Elsevier, vol. 184(C).
    15. Yongmin Chen & Marius Schwartz, 2015. "Differential pricing when costs differ: a welfare analysis," RAND Journal of Economics, RAND Corporation, vol. 46(2), pages 442-460, June.
    16. Adachi, Takanori, 2023. "A sufficient statistics approach for welfare analysis of oligopolistic third‐degree price discrimination," International Journal of Industrial Organization, Elsevier, vol. 86(C).
    17. Zhu Wang & Julian Wright, 2018. "Should platforms be allowed to charge ad valorem fees?," Journal of Industrial Economics, Wiley Blackwell, vol. 66(3), pages 739-760, September.
    18. Nguyen, Xuan, 2014. "Monopolistic third-degree price discrimination under vertical product differentiation," Economics Letters, Elsevier, vol. 125(2), pages 153-155.
    19. Francisco Galera & José Luis à lvarez & 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.
    20. Juan Sebastian Vélez-Velásquez, 2020. "Banning Price Discrimination under Imperfect Competition: Evidence from Colombia's Broadband," Borradores de Economia 1148, Banco de la Republica de Colombia.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:reecde:v:26:y:2022:i:1:d:10.1007_s10058-021-00254-7. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.