Price Discrimination and Spatial Competition

Stefano Colombo ()
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Stefano Colombo: Università Cattolica del Sacro Cuore

Chapter Chapter 2 in Spatial Economic Modelling, 2025, pp 27-45 from Springer

Abstract: Abstract In this chapter, I consider the implications of price discrimination for prices and profits by using the Hotelling model. In particular, I first consider the case where the firms are able to set a different price at any different location (first-degree—or perfect—price discrimination). Then, I consider the case where the firms are able to set a different price at any group of locations, but not within each group (third-degree price discrimination). I show that, in general, price discrimination tends to make competition fiercer with respect to uniform pricing, thus lowering the equilibrium prices and the profits.

Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-82787-7_2

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DOI: 10.1007/978-3-031-82787-7_2

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