Output and Welfare Effects in the Classic Monopoly Price Discrimination Problem

John Vickers and Simon Cowan

No 355, Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: This paper uses convexity arguments to determine the effects of monopolistic third-degree price discrimination on total output and welfare. We focus on benchmark cases, including constant demand elasticities, with constant curvature of inverse demand σ. We show how the effects of price discrimination depend on (a) the degree of curvature σ relative to zero (for output) and one (for welfare), and (b) whether low-price markets have greater curvature than high-price markets.

Keywords: Price Discrimination; Monopoly (search for similar items in EconPapers)
JEL-codes: D42 L12 L13 (search for similar items in EconPapers)
Date: 2007-09-01
New Economics Papers: this item is included in nep-com and nep-mic
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Citations: View citations in EconPapers (9)

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