The welfare effects of third-degree price discrimination with non-linear demand functions

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The welfare effects of third-degree price discrimination with non-linear demand functions

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Simon Cowan

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Simon Cowan

Abstract

The welfare effects of third-degree price discrimination are analyzed when demand in one market is an additively shifted version of demand in the other market and both markets are served with uniform pricing. Social welfare is lower with discrimination if the slope of demand is log-concave or the convexity of demand is non-decreasing in the price. The demand functions commonly used in models of imperfect competition satisfy at least one of these sufficient conditions.

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Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 364.

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Date of creation: 2007
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Handle: RePEc:oxf:wpaper:364

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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-2008-03-25 (All new papers)
NEP-COM-2008-03-25 (Industrial Competition)
NEP-MIC-2008-03-25 (Microeconomics)

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