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Teaching Third-Degree Price Discrimination

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  • David K. Round
  • Ron P. Mclver

Abstract

Abstract: Third-degree price discrimination is taught in almost every intermediate microeconomics class. The theory, geometry, and the algebra behind the concept are simple, and the phenomenon is commonly associated with the sale of many of the goods and services used frequently by students. Classroom discussion is usually vibrant as students can relate their experiences of being on the receiving end of third-degree price discrimination, usually to their advantage. However, the precision of the language used in the exposition of the theory in textbooks is generally less precise than one would hope for, leading students to confuse slope and elasticity. The authors ask textbook writers to provide greater precision in their explanation of why differing elasticities are associated with the prices paid by two (or more) distinct groups of buyers facing third-degree price discrimination.

Suggested Citation

  • David K. Round & Ron P. Mclver, 2006. "Teaching Third-Degree Price Discrimination," The Journal of Economic Education, Taylor & Francis Journals, vol. 37(2), pages 236-243, April.
  • Handle: RePEc:taf:jeduce:v:37:y:2006:i:2:p:236-243
    DOI: 10.3200/JECE.37.2.236-243
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    File URL: http://hdl.handle.net/10.3200/JECE.37.2.236-243
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    Citations

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    Cited by:

    1. Aguirre Pérez, Iñaki, 2011. "Welfare Effects of Third-Degree Price Discrimination: Ippolito Meets Schmalensee and Varian," IKERLANAK 2011-54, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
    2. M Borland & R Howson, 2016. "A problem with the course presentation of the single-price alternative to 3rd-degree price discrimination," Economic Issues Journal Articles, Economic Issues, vol. 21(1), pages 87-97, March.

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