Output and Welfare Effects in the Classic Monopoly Price Discrimination Problem
AbstractThis paper uses convexity arguments to determine the effects of monopolistic third-degree price discrimination on total output and welfare. We focus on benchmark cases, including constant demand elasticities, with constant curvature of inverse demand Ïƒ. We show how the effects of price discrimination depend on (a) the degree of curvature Ïƒ relative to zero (for output) and one (for welfare), and (b) whether low-price markets have greater curvature than high-price markets.
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Bibliographic InfoPaper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 355.
Date of creation: 01 Sep 2007
Date of revision:
Price Discrimination; Monopoly;
Find related papers by JEL classification:
- D42 - Microeconomics - - Market Structure and Pricing - - - Monopoly
- L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-10-06 (All new papers)
- NEP-COM-2007-10-06 (Industrial Competition)
- NEP-MIC-2007-10-06 (Microeconomics)
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