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An Integrated Approach to Teaching Price Discrimination

Author

Listed:
  • Ann Marsden

    (Greenwich School of Management)

  • Hugh Sibly

    (University of Tasmania)

Abstract

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.

Suggested Citation

  • Ann Marsden & Hugh Sibly, 2011. "An Integrated Approach to Teaching Price Discrimination," International Review of Economic Education, Economics Network, University of Bristol, vol. 10(2), pages 75-90.
    • Handle: RePEc:che:ireepp:v:10:y:2011:i:2:p:75-90
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    File URL: https://www.economicsnetwork.ac.uk/iree/v10n2/marsden.pdf
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    References listed on IDEAS

    as
    1. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
    2. Ikeda, Takeshi & Toshimitsu, Tsuyoshi, 2010. "Third-degree price discrimination, quality choice, and welfare," Economics Letters, Elsevier, vol. 106(1), pages 54-56, January.
    3. Stole, Lars A., 2007. "Price Discrimination and Competition," Handbook of Industrial Organization, in: Mark Armstrong & Robert Porter (ed.), Handbook of Industrial Organization, edition 1, volume 3, chapter 34, pages 2221-2299, Elsevier.
    4. 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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    Cited by:

    1. Omer GOKCEKUS & Kevin BENGYAK, 2015. "Learning Heckscher-Ohlin Model in Five Easy Steps," Journal of Economics and Political Economy, EconSciences Journals, vol. 2(1), pages 137-143, March.
    2. Tatyana Netseva-Porcheva, 2013. "Application of the Price Discrimination in Marketing," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 3, pages 51-63, September.
    3. Brendan Cushing-Daniels, 2020. "Rethinking Profit-Maximization in Second-Degree Price Discriminating Markets," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 48(2), pages 223-235, June.
    4. Omer GOKCEKUS & Kevin BENGYAK, 2015. "Learning Heckscher-Ohlin Model in Five Easy Steps," Journal of Economics and Political Economy, KSP Journals, vol. 2(1), pages 137-143, March.

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