Intrapersonal price discrimination in a dominant firm model

Manel Antelo and Lluis Bru

MPRA Paper from University Library of Munich, Germany

Abstract: The standard dominant firm (DF)-competitive fringe model, in which all firms sell the good through linear pricing, is extended to the use of nonlinear contracts in the form of two-part tariffs (2PT). We show that under general conditions, the DF practices intrapersonal price discrimination, and supplies to fewer consumers than under linear pricing. As a consequence, nonlinear pricing leads to an inefficient result and consumers are worse off than when the DF uses linear prices; on the contrary, fringe firms are better off as they end up charging a higher price for the good.

Keywords: Dominant firm; fringe firms; linear and nonlinear contracts; intrapersonal price discrimination (search for similar items in EconPapers)
JEL-codes: L13 (search for similar items in EconPapers)
Date: 2021-06
New Economics Papers: this item is included in nep-bec, nep-com, nep-cta, nep-ind and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:108412

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