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Technology Choice and Third Degree Price Discrimination in a Monopoly

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  • Francisco Galera

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

  • José Luis Álvarez

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

  • Juan Carlos Molero

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

Abstract

This paper studies technology choice as a relevant aspect to be considered when analyzing price discrimination and welfare. Our results reinforce the traditional wisdom that an increase in output is a necessary condition for price discrimination to improve social welfare. But we also find that the positive output effect does not need to be as large as previously supposed since, under some conditions, the monopoly will move to a socially preferred technology only if third-degree price discrimination is allowed.

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File URL: http://www.unav.es/facultad/econom/files/workingpapersmodule/@random50169a3d22927/1352909202_WP_UNAV_15_12.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 15/12.

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Length: 9 pages
Date of creation: 14 Nov 2012
Date of revision:
Handle: RePEc:una:unccee:wp1512

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

Related research

Keywords: monopoly; technology choice; third degree price discrimination;

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  1. I�aki Aguirre & Simon Cowan & John Vickers, 2010. "Monopoly Price Discrimination and Demand Curvature," American Economic Review, American Economic Association, vol. 100(4), pages 1601-15, September.
  2. 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.
  3. Simon Cowan, 2012. "Third-Degree Price Discrimination and Consumer Surplus," Journal of Industrial Economics, Wiley Blackwell, vol. 60(2), pages 333-345, 06.
  4. Ikeda, Takeshi & Toshimitsu, Tsuyoshi, 2010. "Third-degree price discrimination, quality choice, and welfare," Economics Letters, Elsevier, vol. 106(1), pages 54-56, January.
  5. Schmalensee, Richard, 1981. "Output and Welfare Implications of Monopolistic Third-Degree Price Discrimination," American Economic Review, American Economic Association, vol. 71(1), pages 242-47, March.
  6. Varian, Hal R, 1985. "Price Discrimination and Social Welfare," American Economic Review, American Economic Association, vol. 75(4), pages 870-75, September.
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