ON THIRD‐DEGREE PRICE DISCRIMINATION IN OLIGOPOLY*

Krishnendu Dastidar

Manchester School, 2006, vol. 74, issue 2, 231-249

Abstract: In this paper we analyse the effects of third‐degree price discrimination on output, profit and welfare in a symmetric cost duopoly. We provide sufficient conditions for output, profit and welfare to be higher (or lower) under third‐degree price discrimination in a duopoly, compared with a uniform price regime. Comparing our findings with the traditional results on monopoly price discrimination, we show that the output and profit effects under duopoly price discrimination are very different from those under the monopoly case. However, the welfare effects are very similar.

Date: 2006
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