Monopolistic third-degree price discrimination, customer’s patience and welfare

Xingtang Wang ()
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Xingtang Wang: Institute of Guangdong-Hong Kong-Macau Great Bay Area, Guangdong University of Foreign Studies

Journal of Economics, 2025, vol. 144, issue 3, No 4, 269-285

Abstract: Abstract Consumers are strategic; they choose whether to buy products now or later. In a two-period game-theoretical model, we examine the effects of third-degree price discrimination on the market, as well as the role of consumer patience in shaping these effects. When product quality is endogenous, we find that third-degree price discrimination will bring higher consumer surplus and social welfare if consumer patience is high. When the quality is exogenous, we find that third-degree price discrimination increases firm profit, and reduces consumer surplus and social welfare. The consumer patience will reduce the effect of third-degree price discrimination. This paper expands the theoretical research on the effect of third-degree price discrimination on the market from the perspective of consumer behavior.

Keywords: Third-degree price discrimination; Customer’s patience; Consumer surplus; Social welfare (search for similar items in EconPapers)
JEL-codes: D42 L12 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:144:y:2025:i:3:d:10.1007_s00712-024-00893-8

DOI: 10.1007/s00712-024-00893-8

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