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Multiproduct price discrimination with quantity limits: An application to zero-rating

Firat Inceoglu and Xingyi Liu

Economics Letters, 2019, vol. 180, issue C, 41-45

Abstract: Zero-rating is a recent practice that allows internet providers to discriminate among contents. Focusing on the consumer side, we show that a monopolist provider may implement zero-rating in order to extract more surplus from consumers who have heterogeneous tastes for content. This is akin to the practice of quantity discounts with one difference: the monopolist screens consumer types by distorting not only the total consumption, but also the composition of consumption. Zero-rating may lead to an increase in network capacity and improve welfare.

Keywords: Price discrimination; Zero rating; Quantity discounts (search for similar items in EconPapers)
JEL-codes: L1 L12 L96 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1016/j.econlet.2019.04.002

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