Welfare-increasing third-degree price discrimination
The welfare and output effects of monopoly third-degree price discrimination are analyzed when inverse demand functions are parallel. Welfare is higher with discrimination than with a uniform price when demand functions are derived from the logistic distribution, and from a more general class of distributions. The sufficient condition in Varian (1985) for a welfare increase holds for these demand functions. Total output is higher with discrimination for a large set of demand functions including those derived from strictly log-concave distributions with increasing cost pass-through, such as the normal, logistic and extreme value, and standard log-convex demands.
|Date of creation:||22 Apr 2013|
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- repec:ecj:econjl:v:122:y:2012:i::p:332-338 is not listed on IDEAS
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"Third-Degree Price Discrimination and Consumer Surplus,"
Economics Series Working Papers
462, University of Oxford, Department of Economics.
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2009-39, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
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