A problem with the course presentation of the single-price alternative to 3rd-degree price discrimination

M Borland and R Howson

Economic Issues Journal Articles, 2016, vol. 21, issue 1, 87-97

Abstract: The typical procedure for the determination of output, price, and profit associated with the single-price alternative to 3rd-degree price discrimination found in intermediate texts, managerial texts, and other texts concerned with pricing works well under certain specifications with respect to revenue and cost, but not all. It is oversimplified and, as such, unreliable for the determination of output, price, and profit, dependent on arbitrary, but specific, choices of values for the parameters of associated revenue and cost functions; and is, therefore, at least non-general. Suggestions for course presentation of the single-price alternative, given the reconsideration of the procedure for the determination of output, price, and profit and the computation of a discriminating critical value developed in this paper, are easily inferred. Illustrations are provided throughout.

Date: 2016
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