Third-Degree Price Discrimination and Consumer Surplus
AbstractThis paper presents simple conditions for monopoly third-degree price discrimination to have negative or positive effects on aggregate consumer surplus.� Consumer surplus is often reduced by discrimination, for example when total welfare (consumer surplus and profits) falls.� Surplus increases with discrimination, however, in two cases: first, when the marginal revenues without discrimination are close together and inverse demand in the market where the price will fall with discrimination is more convex; second, when inverse demand functions are highly convex and the discriminatory prices are close together.
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Bibliographic InfoPaper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 462.
Date of creation: 01 Nov 2009
Date of revision:
Third-degree price discrimination; Monopoly; Consumer surplus;
Other versions of this item:
- Simon Cowan, 2012. "Third-Degree Price Discrimination and Consumer Surplus," Journal of Industrial Economics, Wiley Blackwell, vol. 60(2), pages 333-345, 06.
- 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-2009-11-27 (All new papers)
- NEP-COM-2009-11-27 (Industrial Competition)
- NEP-IND-2009-11-27 (Industrial Organization)
- NEP-MIC-2009-11-27 (Microeconomics)
- NEP-MKT-2009-11-27 (Marketing)
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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