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Welfare and Output in Third-Degree Price Discrimination: a Note

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Author Info

  • Francisco Galera

    ()
    (School of Economics and Business Administration, University of Navarra)

  • Jesús M. Zaratiegui

    ()
    (School of Economics and Business Administration, University of Navarra)

Abstract

In this note I provide examples to show that, contrary to what is widely believed, when changing from an uniform price to a third-degree price discrimination situation, an improvement in welfare is possible with output reduction, if there is more than one firm.

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File URL: http://www.unav.es/facultad/econom/files/workingpapersmodule/@random437a048e3df62/1132242990_wp0703.pdf
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Bibliographic Info

Paper provided by School of Economics and Business Administration, University of Navarra in its series Faculty Working Papers with number 07/03.

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Length: 10 pages pages
Date of creation: May 2003
Date of revision:
Publication status: Published, International Journal of Industrial Organization, 2006, vol. 24(3): pp. 605-611
Handle: RePEc:una:unccee:wp0703

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Web page: http://www.unav.es/facultad/econom

Related research

Keywords: price discrimination; imperfect competition; welfare;

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References

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  1. Armstrong, Mark & Vickers, John, 2001. "Competitive Price Discrimination," RAND Journal of Economics, The RAND Corporation, vol. 32(4), pages 579-605, Winter.
  2. Takanori Adachi, 2005. "Third-Degree Price Discrimination, Consumption Externalities and Social Welfare," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 72(285), pages 171-178, 02.
  3. Yoshihiro Yoshida, 2000. "Third-Degree Price Discrimination in Input Markets: Output and Welfare," American Economic Review, American Economic Association, vol. 90(1), pages 240-246, March.
  4. Judith R. Gelman & Steven C. Salop, 1983. "Judo Economics: Capacity Limitation and Coupon Competition," Bell Journal of Economics, The RAND Corporation, The RAND Corporation, vol. 14(2), pages 315-325, Autumn.
  5. Adachi, Takanori, 2002. "A Note on 'Third-Degree Price Discrimination with Interdependent Demands.'," Journal of Industrial Economics, Wiley Blackwell, vol. 50(2), pages 235, June.
  6. Kenneth S. Corts, 1998. "Third-Degree Price Discrimination in Oligopoly: All-Out Competition and Strategic Commitment," RAND Journal of Economics, The RAND Corporation, vol. 29(2), pages 306-323, Summer.
  7. Varian, Hal R, 1985. "Price Discrimination and Social Welfare," American Economic Review, American Economic Association, vol. 75(4), pages 870-75, September.
  8. Schwartz, Marius, 1990. "Third-Degree Price Discrimination and Output: Generalizing a Welfare Result," American Economic Review, American Economic Association, vol. 80(5), pages 1259-62, December.
  9. Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 93(3), pages 488-511, June.
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Citations

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Cited by:
  1. Shigeru Matsumoto & Hajime Sugeta, 2007. "Antitrust Policy and Environmental Protection," Economics Bulletin, AccessEcon, vol. 17(2), pages 1-10.
  2. Ebenezer Tetteh, 2009. "Implementing differential pricing for essential medicines via country-specific bilateral negotiated discounts," Applied Health Economics and Health Policy, Springer, Springer, vol. 7(2), pages 71-89, June.
  3. Bertoletti, Paolo, 2005. "Uniform pricing and social welfare," MPRA Paper 1082, University Library of Munich, Germany.
  4. Yeung-Nan Shieh, 2006. "Monopsonistic wage discrimination and employment effect under conditions of constant labor supply elasticity," Economics Bulletin, AccessEcon, vol. 4(32), pages 1-4.
  5. repec:ebl:ecbull:v:4:y:2006:i:32:p:1-4 is not listed on IDEAS
  6. Stole, Lars A., 2007. "Price Discrimination and Competition," Handbook of Industrial Organization, Elsevier, Elsevier.
  7. Iñaki Aguirre, 2006. "Monopolistic price discrimination and output effect under conditions of constant elasticity demand," Economics Bulletin, AccessEcon, vol. 4(23), pages 1-6.
  8. repec:ebl:ecbull:v:4:y:2006:i:23:p:1-6 is not listed on IDEAS
  9. Pedro Barros & Xavier Martinez-Giralt, 2008. "On international cost-sharing of pharmaceutical R&D," International Journal of Health Care Finance and Economics, Springer, Springer, vol. 8(4), pages 301-312, December.
  10. Edward Lopez & David Molina, 2010. "Third-Degree Price Discrimination: Apology Not Necessary," Atlantic Economic Journal, International Atlantic Economic Society, International Atlantic Economic Society, vol. 38(4), pages 383-397, December.
  11. repec:ebl:ecbull:v:17:y:2007:i:2:p:1-10 is not listed on IDEAS

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