Competitive Differential Pricing

Yongmin Chen, Jianpei Li () and Marius Schwartz
Additional contact information
Jianpei Li: School of International Trade and Economics, University of International Business and Economics, China, http://site.uibe.edu.cn/actionszdw/ViewTeacher.aspx?NewsID=156

Working Papers from Georgetown University, Department of Economics

Abstract: This paper analyzes welfare under differential versus uniform pricing across oligopoly makes that differ in costs of service. We establish necessary and sufficient conditions on demand properties—cross/own elasticities and curvature—for differential pricing by symmetric firms to raise aggregate consumer surplus, profit, and total welfare. The analysis reveals intuitively why differential pricing is generally beneficial though not always—including why profit can fall, unlike for monopoly—and why it is more beneficial than oligopoly third-degree price discrimination. When firms have asymmetric costs, however, differential pricing can reduce profit or consumer surplus even with ‘simple’ demands such as linear.

Keywords: Differential Pricing; Price Discrimination; Demand Curvature; Cross-Price Elasticity; Pass-Through; Oligopoly (search for similar items in EconPapers)
JEL-codes: D43 L10 L13 (search for similar items in EconPapers)
Pages: 36
Date: 2018-09-11
New Economics Papers: this item is included in nep-cna, nep-com, nep-gth, nep-ind and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Competitive differential pricing (2021)
Working Paper: Competitive differential pricing (2019)
Working Paper: Competitive Differential Pricing (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:geo:guwopa:gueconwpa~18-18-10

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