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The Informational Benefit of Price Discrimination

Catherine Gendron-Saulnier () and Marc Santugini ()
Additional contact information
Marc Santugini: IEA, HEC Montréal, http://www.hec.ca/iea/

No 13-02, Cahiers de recherche from HEC Montréal, Institut d'économie appliquée

Abstract: We consider a monopoly supplying a homogeneous good to two separate markets with different demands. In one of the markets, some buyers do not know the quality of the good, but learn about it from observing prices. Under noisy demand, third-degree price discrimination is shown to alter the informational content of the price-signals received by the uninformed buyers. Specifically, discriminatory pricing have informational benefits over uniform pricing, i.e., the posterior beliefs of the uninformed buyers have a smaller bias and a lower variance.

Keywords: Market segmentation; Monopoly; Quality of information; Signaling; Third-degree price discrimination (search for similar items in EconPapers)
JEL-codes: D82 D83 L12 L15 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2013-07
New Economics Papers: this item is included in nep-com, nep-cta, nep-mic, nep-mkt and nep-spo
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Persistent link: https://EconPapers.repec.org/RePEc:iea:carech:1302

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