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A sufficient statistics approach for welfare analysis of oligopolistic third‐degree price discrimination

Takanori Adachi

International Journal of Industrial Organization, 2023, vol. 86, issue C

Abstract: This paper proposes a sufficient statistics approach to studying the welfare effects of third-degree price discrimination in differentiated oligopoly. Specifically, our sufficient conditions for price discrimination to increase or decrease social welfare simply entail a cross-market comparison of multiplications of such sufficient statistics as pass-through, conduct, and profit margin that are functions of first-order and second-order elasticities of the firm’s demand. Notably, these results are derived under a general class of market demand, and can be readily extended to accommodate heterogeneous firms. These features suggest that our approach has potential for conducting welfare analysis without a full specification of an oligopoly model.

Keywords: Third-degree price discrimination; Oligopoly; Sufficient statistics (search for similar items in EconPapers)
JEL-codes: D43 L11 L13 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1016/j.ijindorg.2022.102893

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