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Intrapersonal price discrimination in a dominant firm model

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  • Antelo, Manel
  • Bru, Lluís

Abstract

The standard dominant firm (DF)-competitive fringe model, in which all firms sell the good through linear pricing, is extended to the use of nonlinear contracts in the form of two-part tariffs (2PT). We show that under general conditions, the DF practices intrapersonal price discrimination, and supplies to fewer consumers than under linear pricing. As a consequence, nonlinear pricing leads to an inefficient result and consumers are worse off than when the DF uses linear prices; on the contrary, fringe firms are better off as they end up charging a higher price for the good.

Suggested Citation

  • Antelo, Manel & Bru, Lluís, 2021. "Intrapersonal price discrimination in a dominant firm model," MPRA Paper 108412, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:108412
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    File URL: https://mpra.ub.uni-muenchen.de/108412/1/MPRA_paper_108412.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Dominant firm; fringe firms; linear and nonlinear contracts; intrapersonal price discrimination;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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