Neutrality of third-degree price discrimination

Yong Chao and Babu Nahata

International Review of Economics Education, 2021, vol. 36, issue C

Abstract: This note shows that compared to uniform pricing, third-degree price discrimination can be neutral. For linear demands, having all price intercepts of submarkets’ inverse demands to be the same is the necessary and sufficient condition for third-degree price discrimination to be neutral. For general demands, when all submarkets’ demands are proportional to each other, not only will all the submarkets be served under uniform pricing, but all prices before and after price discrimination will be the same.

Keywords: Third-degree price discrimination; Neutrality; Price intercept; JEL Codes: A22, D42, D61, L40 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ireced:v:36:y:2021:i:c:s1477388020300347

DOI: 10.1016/j.iree.2020.100207

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