IDEAS home Printed from https://ideas.repec.org/p/arx/papers/2401.12366.html

Screening and Segmenting: A Consumer Surplus Perspective

Author

Listed:
  • Dirk Bergemann
  • Tibor Heumann
  • Michael C. Wang

Abstract

We study how market segmentation affects consumers when a monopolist can adjust both prices and product qualities across segments, engaging in second- and third-degree price discrimination simultaneously. We characterize the consumer-optimal segmentation and show that it has a striking structure: consumers with the same value receive the same quality in every segment, though prices differ. Under mild conditions, any segmentation harms consumers if and only if demand is more elastic than a cost-determined threshold. Hence, potential benefits for consumers depend critically on cost and demand elasticities. These findings have implications for regulatory policy regarding price discrimination and market segmentation.

Suggested Citation

  • Dirk Bergemann & Tibor Heumann & Michael C. Wang, 2024. "Screening and Segmenting: A Consumer Surplus Perspective," Papers 2401.12366, arXiv.org, revised Mar 2026.
    • Handle: RePEc:arx:papers:2401.12366
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/2401.12366
    File Function: Latest version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Joan Robinson, 1969. "The Economics of Imperfect Competition," Palgrave Macmillan Books, Palgrave Macmillan, edition 0, number 978-1-349-15320-6, March.
    2. Nima Haghpanah & Ron Siegel, 2022. "The Limits of Multiproduct Price Discrimination," American Economic Review: Insights, American Economic Association, vol. 4(4), pages 443-458, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alireza Fallah & Michael I. Jordan & Ali Makhdoumi & Azarakhsh Malekian, 2024. "The Limits of Price Discrimination Under Privacy Constraints," Papers 2402.08223, arXiv.org, revised Jun 2024.
    2. Bergemann, Dirk & Heumann, Tibor & Wang, Michael, 2024. "A Unified Approach to Second and Third Degree Price Discrimination," CEPR Discussion Papers 18793, C.E.P.R. Discussion Papers.
    3. Louis Alessi, 1974. "Aneconomic analysis of government ownership and reculation," Public Choice, Springer, vol. 19(1), pages 1-42, September.
    4. Iga Magda & Ewa Cukrowska-Torzewska, 2019. "Gender wage gap in the workplace: Does the age of the firm matter?," IBS Working Papers 01/2019, Instytut Badan Strukturalnych.
    5. Marina D. SIMONOVA & Irina P. MAMIY, 2019. "Online transport services market in Russia amid economy digitalization," Upravlenets, Ural State University of Economics, vol. 10(3), pages 94-103, July.
    6. Pérez, Jorge & Vial, Felipe & Zárate, Román, 2022. "Urban Transit Infrastructure: Spatial Mismatch and Labor Market Power," Research Department working papers 1992, CAF Development Bank Of Latinamerica.
    7. Stephan Unger, 2019. "The Effect of Allocative Efficiency of Free Markets on Entropy and its Implications on Taxes," Athens Journal of Business & Economics, Athens Institute for Education and Research (ATINER), vol. 5(4), pages 287-300, October.
    8. Mark Hayes, 2016. "Trades unions, real wages and full employment," Working Papers PKWP1615, Post Keynesian Economics Society (PKES).
    9. Donald Harris, 1972. "The black ghetto as colony: A theoretical critique and alternative formulation," The Review of Black Political Economy, Springer;National Economic Association, vol. 2(4), pages 3-33, September.
    10. Vicente Moreno-Casas, 2024. "A coevolutionary approach to institutional lock-in," Review of Evolutionary Political Economy, Springer, vol. 5(3), pages 495-509, October.
    11. Einer Elhauge & Barry Nalebuff, 2017. "The Welfare Effects of Metering Ties," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 33(1), pages 68-104.
    12. J. E. King, 2000. "Introduction to an Unpublished Note by Nicholas Kaldor & Joan Robinson," Review of Political Economy, Taylor & Francis Journals, vol. 12(3), pages 261-265.
    13. Daniel Ferrés & Gaurav Kankanhalli & Pradeep Muthukrishnan, 2022. "Anti-Poaching Agreements, Corporate Hiring, and Innovation: Evidence from the Technology Industry," Documentos de Trabajo/Working Papers 2205, Facultad de Ciencias Empresariales y Economia. Universidad de Montevideo..
    14. Tamara TODOROVA, 2021. "Some Efficiency Aspects of Monopolistic Competition: Innovation, Variety and Transaction Costs," Theoretical and Practical Research in the Economic Fields, ASERS Publishing, vol. 12(2), pages 82-88.
    15. Bergemann, Dirk & Castro, Francisco & Weintraub, Gabriel, 2022. "Third-degree price discrimination versus uniform pricing," Games and Economic Behavior, Elsevier, vol. 131(C), pages 275-291.
    16. Jérémy Tanguy & Sylvie Blasco & Johanne Bacheron & Eva Moreno Galbis, 2024. "Labor market concentration and gender gaps," French Stata Users' Group Meetings 2024 31, Stata Users Group.
    17. Ganguly, Arpan & Spinola, Danilo, 2024. "Growth and distribution regimes under global value chains: Diversification, integration, and uneven development," Structural Change and Economic Dynamics, Elsevier, vol. 70(C), pages 634-649.
    18. Marcel Steffen Eckardt, 2022. "Minimum wages in an automating economy," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 24(1), pages 58-91, February.
    19. Carroni, Elias & Ferrari, Luca & Righi, Simone, 2019. "The price of discovering your needs online," Journal of Economic Behavior & Organization, Elsevier, vol. 164(C), pages 317-330.
    20. Holt, Andrew Chase, 2024. "Monopsony power in the United States: Evidence from the great depression," Explorations in Economic History, Elsevier, vol. 92(C).

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arx:papers:2401.12366. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: arXiv administrators (email available below). General contact details of provider: http://arxiv.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.