An Integrated Approach to Teaching Price Discrimination
Textbooks present the three 'degrees' of price discrimination as a sequence of independent pricing methods and consequently provide inadequate insight as to when a firm might adopt a particular pricing strategy. The paper describes a taxonomy of the various mechanisms of price discrimination, which can be used to teach monopolistic price discrimination in an integrated way. The pricing strategy adopted by firms is based on (i) the information on consumer demand available to it and (ii) whether the firm has the ability to conduct non-linear pricing. The paper proposes a method for ranking profit and efficiency levels under different price discrimination strategies. The proposed taxonomy is compared to the existing textbook approach.
Volume (Year): 10 (2011)
Issue (Month): 2 ()
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References listed on IDEAS
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- Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, July.
- Ikeda, Takeshi & Toshimitsu, Tsuyoshi, 2010. "Third-degree price discrimination, quality choice, and welfare," Economics Letters, Elsevier, vol. 106(1), pages 54-56, January.
- Stole, Lars A., 2007. "Price Discrimination and Competition," Handbook of Industrial Organization, Elsevier.
- Kathleen Carroll & Dennis Coates, 1999. "Teaching Price Discrimination: Some Clarification," Southern Economic Journal, Southern Economic Association, vol. 66(2), pages 466-480, October.
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