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Listed author(s):
  • Babu Nahata

    (Department of Economics, University of Louisville)

  • Serguei Kokovin

    (Department of Economics, Novosibirsk State University)

  • Evgeny Zhelobodko

    (Department of Economics, Novosibirsk State University)

We analyze nonlinear pricing problem under monopoly using two hidden types of agents with linear demands and fully characterize all possible optimal solutions for both ordered and non-ordered demands. We show that both optimal packages can either contain Pareto-efficient quantities or one package can be undersized or oversized. All these effects are non- degenerate and are expected to hold for nonlinear demands. Surprisingly, the total output under nonlinear price discrimination with self- selection is neither unambigously realted to efficiency nor to the degree of monopoly power (demand elasticity). We also show that under limited range of parameters quantity premia can occur only when demands are ordered.

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Paper provided by EconWPA in its series General Economics and Teaching with number 0307002.

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Length: 35 pages
Date of creation: 03 Jul 2003
Handle: RePEc:wpa:wuwpgt:0307002
Note: Type of Document - Acrobat PDF; prepared on IBM PC; to print on HP/PostScript/; pages: 35
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References listed on IDEAS
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  1. Michael L. Katz, 1983. "Non-uniform Pricing, Output and Welfare under Monopoly," Review of Economic Studies, Oxford University Press, vol. 50(1), pages 37-56.
  2. Michael L. Katz, 1984. "Nonuniform Pricing with Unobservable Numbers of Purchases," Review of Economic Studies, Oxford University Press, vol. 51(3), pages 461-470.
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