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The welfare effects of third-degree price discrimination with non-linear demand functions

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  • Simon Cowan

Abstract

The welfare effects of third-degree price discrimination are analyzed when demand in one market is an additively shifted version of demand in the other market and both markets are served with uniform pricing. Social welfare is lower with discrimination if the slope of demand is log-concave or the convexity of demand is non-decreasing in the price. The demand functions commonly used in models of imperfect competition satisfy at least one of these sufficient conditions.

Suggested Citation

  • Simon Cowan, 2007. "The welfare effects of third-degree price discrimination with non-linear demand functions," Economics Series Working Papers 364, University of Oxford, Department of Economics.
  • Handle: RePEc:oxf:wpaper:364
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    File URL: http://www.economics.ox.ac.uk/materials/working_papers/paper364.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Price Discrimination; Monopoly;

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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