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The Limits of Price Discrimination

Dirk Bergemann, Benjamin Brooks and Stephen Morris

American Economic Review, 2015, vol. 105, issue 3, 921-57

Abstract: We analyze the welfare consequences of a monopolist having additional information about consumers' tastes, beyond the prior distribution; the additional information can be used to charge different prices to different segments of the market, i.e., carry out "third degree price discrimination." We show that the segmentation and pricing induced by the additional information can achieve every combination of consumer and producer surplus such that: (i) consumer surplus is nonnegative, (ii) producer surplus is at least as high as profits under the uniform monopoly price, and (iii) total surplus does not exceed the surplus generated by efficient trade. (JEL D42, D83, L12)

JEL-codes: D42 D83 L12 (search for similar items in EconPapers)
Date: 2015
Note: DOI: 10.1257/aer.20130848
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (132)

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Related works:
Working Paper: The Limits of Price Discrimination (2014) Downloads
Working Paper: The Limits of Price Discrimination (2014) Downloads
Working Paper: The Limits of Price Discrimination (2013) Downloads
Working Paper: The Limits of Price Discrimination (2013) Downloads
Working Paper: The Limits of Price Discrimination (2013) Downloads
Working Paper: The Limits of Price Discrimination (2013) Downloads
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