On the degree of distortions under second-degree price discrimination

Ram Orzach () and Miron Stano ()
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Ram Orzach: Department of Economics, Oakland University, USA
Miron Stano: Department of Economics, Oakland University, USA

The Journal of Mechanism and Institution Design, 2021, vol. 6, issue 1, 101-112

Abstract: This paper highlights the limitations and applicability of results developed by Chao & Nahata (2015) for nonlinear pricing. Although Chao and Nahata appear to provide necessary and sufficient conditions for general utility functions, we show that one of their results leads only to a restatement of two constraints, and another result may not be valid when consumers can freely dispose of the good. Their model allows for the possibility that higher quantities will have a lower price than smaller quantities. We provide conditions under free disposal that preclude this anomaly. Our analysis suggests that further research on violations of the single-crossing condition should be encouraged.

Keywords: Second-degree price discrimination; nonlinear pricing; single-crossing condition. (search for similar items in EconPapers)
JEL-codes: D42 D61 D82 L12 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:jmi:articl:jmi-v6i1a4

DOI: 10.22574/jmid.2021.12.004

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