Screening with Congestion
AbstractWe study the effect of congestion on monopoly second-degree price discrimination. We provide three results. First, with congestion, the firm does not always provide distinct contracts (i.e., it is not always optimal to price discriminate) and it is more likely for the low-valuation buyer to be excluded. Second, the presence of congestion implies that no buyer receives an efficient allocation. In particular, the high-valuation buyer might be offered a higher or a lower quality (relative to the first-degree price discrimination offer). Finally, congestion might be beneficial to buyers. Specifically, for values of the parameters for which all types are serviced, consumer surplus under second-degree price discrimination may be greater than consumer surplus under no price discrimination.
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Bibliographic InfoPaper provided by CIRPEE in its series Cahiers de recherche with number 1239.
Date of creation: 2012
Date of revision:
Congestion; Second-degree price discrimination; Screening;
Find related papers by JEL classification:
- D40 - Microeconomics - - Market Structure and Pricing - - - General
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-10-27 (All new papers)
- NEP-COM-2012-10-27 (Industrial Competition)
- NEP-IND-2012-10-27 (Industrial Organization)
- NEP-MIC-2012-10-27 (Microeconomics)
- NEP-MKT-2012-10-27 (Marketing)
- NEP-NET-2012-10-27 (Network Economics)
- NEP-REG-2012-10-27 (Regulation)
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.:
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