Price discrimination and investment incentives

Alexei Alexandrov and Joyee Deb

International Journal of Industrial Organization, 2012, vol. 30, issue 6, 615-623

Abstract: We examine a model of a monopolist selling to two segments of consumers with different preferences for quality. We show that if the firm is unable to price discriminate between the segments, then there is less investment in quality. We find that both consumer segments, and society overall, may suffer if the firm is unable to price discriminate. We extend the model to duopoly competition, and find that our results still hold.

Keywords: price discrimination; investment; parallel trade; pharmaceuticals; net neutrality (search for similar items in EconPapers)
JEL-codes: D92 F13 L13 L42 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:30:y:2012:i:6:p:615-623

DOI: 10.1016/j.ijindorg.2012.07.001

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