On the Alignment of Consumer Surplus and Total Surplus under Competitive Price Discrimination

Dirk Bergemann, Benjamin Brooks and Stephen Morris

American Economic Journal: Microeconomics, 2025, vol. 17, issue 4, 234-59

Abstract: We study the role of information in Bertrand competition with differentiated goods and heterogeneous production costs. When producers know their costs and consumers know their values, consumer surplus and total surplus are aligned, in the sense that the information and equilibrium that maximize consumer surplus also maximize total surplus. Alignment may fail if consumers do not know their values: Partial information about values makes purchases less efficient but intensifies price competition. We illustrate this within a Hotelling duopoly framework.

JEL-codes: D11 D43 D82 D83 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1257/mic.20240197

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