Screening and Segmenting: A Consumer Surplus Perspective

Dirk Bergemann, Tibor Heumann and Michael Wang

No 21665, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We analyze consumer surplus when a monopolist can adjust both prices and product qualities across segments, engaging in second- and third-degree price discrimination simultaneously. We characterize the consumer-optimal segmentation and show that it has a striking structure: consumers with the same value receive the same quality in every segment, though prices differ. Under mild conditions, any segmentation harms consumers if and only if demand is sufficiently more elastic than supply. Hence, potential benefits for consumers depend critically on demand and supply elasticities. These findings have implications for regulatory policy regarding price discrimination and market segmentation.

JEL-codes: D44 D83 L12 (search for similar items in EconPapers)
Date: 2026-06
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Working Paper: Screening and Segmenting: A Consumer Surplus Perspective (2026)
Working Paper: Screening and Segmenting: A Consumer Surplus Perspective (2026)
Working Paper: Screening and Segmenting: A Consumer Surplus Perspective (2026)
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