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A Taxonomy of Monopolistic Pricing

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Abstract

Textbooks present the three ‘degrees’ of price discrimination as a sequence of independent pricing methods. These textbook treatments consequently provide inadequate insight as to when a firm might adopt a particular pricing strategy. The paper describes an informationbased taxonomy 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 the information on consumer demand available to it. The paper proposes a method for ranking profit and efficiency levels under different price discrimination strategies. The information based taxonomy is compared to the traditional textbook approach.

Suggested Citation

  • Sibly, Hugh & Marsden, Ann, 2008. "A Taxonomy of Monopolistic Pricing," Working Papers 7339, University of Tasmania, Tasmanian School of Business and Economics, revised 01 Sep 2008.
    • Handle: RePEc:tas:wpaper:7339
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    File URL: http://eprints.utas.edu.au/7339/1/DP2008_No_04_Sibly.pdf
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    References listed on IDEAS

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    1. Spence, Michael, 1977. "Nonlinear prices and welfare," Journal of Public Economics, Elsevier, vol. 8(1), pages 1-18, August.
    2. 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.
    3. Schmalensee, Richard, 1981. "Output and Welfare Implications of Monopolistic Third-Degree Price Discrimination," American Economic Review, American Economic Association, vol. 71(1), pages 242-247, March.
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    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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