When does third-degree price discrimination reduce social welfare, and when does it raise it?

Simon GB Cowan and Simon Cowan
Authors registered in the RePEc Author Service: Simon Cowan

No 410, Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: Sufficient conditions are developed for third-degree price discrimination by a monopolist serving all markets to reduce and raise social welfare. Welfare falls if the demand function in the market whose price is higher with discrimination is at least as convex as that in the other market (at the non-discriminatory price). Welfare rises if inverse demand in the low-price market is more convex (at the discriminatory price) than inverse demand in the high-price market and the discriminatory prices are close together, so the cost of misallocation is less than the benefit of higher output.

Keywords: Price Discrimination; Monopoly (search for similar items in EconPapers)
JEL-codes: D42 L12 L13 (search for similar items in EconPapers)
Date: 2008-10-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://ora.ox.ac.uk/objects/uuid:35b5c185-659d-42d5-9651-40585a7d56df (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oxf:wpaper:410

Access Statistics for this paper

More papers in Economics Series Working Papers from University of Oxford, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Anne Pouliquen ( this e-mail address is bad, please contact ).