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On the Alignment of Consumer Surplus and Total Surplus Under Competitive Price Discrimination

Dirk Bergemann, Benjamin Brooks and Stephen Morris
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Benjamin Brooks: University of Chicago

No 2373, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: A number of producers of heterogeneous goods with heterogeneous costs compete in prices. When producers know their own production costs and consumers know their values, consumer surplus and total surplus are aligned: the information structure and equilibrium that maximize consumer surplus also maximize total surplus. We report when alignment extends to the case where either consumers are uncertain about their own values or producers are uncertain about their own costs, and we also give examples showing when it does not. Less information for either producers or consumers may intensify competition in a way that benefits consumers but results in inefficient production.

Pages: 58 pages
Date: 2023-11-12
New Economics Papers: this item is included in nep-com, nep-gth, nep-ind, nep-mic and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:cwl:cwldpp:2373

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