Spatial Pricing Policies Reconsidered: Monopoly Performance and Location

Lin‐Ti Tan

Journal of Regional Science, 2001, vol. 41, issue 4, 601-615

Abstract: This paper reexamines the welfare implications of three pricing regimes (mill, uniform, and discriminatory) for a monopoly. Assuming linear demand and constant marginal costs, I show that with the introduction of endogenous location choice, uniform delivered pricing may provide the highest social welfare when demands in different markets are sufficiently heterogeneous; whereas discriminatory pricing always dominates uniform pricing when demands in different markets are similar.

Date: 2001
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