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Monopoly Price Discrimination and Demand Curvature

Author

Listed:
  • Iñaki Aguirre
  • Simon Cowan
  • John Vickers

Abstract

This paper presents a general analysis of the effects of monopolistic third-degree price discrimination on welfare and output when all markets are served. Sufficient conditions — involving straightforward comparisons of the curvatures of the direct and inverse demand functions in the different markets — are presented for discrimination to have negative or positive effects on social welfare and output. (JEL D42)

Suggested Citation

  • Iñaki Aguirre & Simon Cowan & John Vickers, 2010. "Monopoly Price Discrimination and Demand Curvature," American Economic Review, American Economic Association, vol. 100(4), pages 1601-1615, September.
    • Handle: RePEc:aea:aecrev:v:100:y:2010:i:4:p:1601-15
    Note: DOI: 10.1257/aer.100.4.1601
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    References listed on IDEAS

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    6. Simon Cowan, 2007. "The welfare effects of third-degree price discrimination with nonlinear demand functions," RAND Journal of Economics, RAND Corporation, vol. 38(2), pages 419-428, June.
    7. W. Leontief, 1940. "The Theory of Limited and Unlimited Discrimination," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 54(3), pages 490-501.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly

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