| Sumario: | The objective of this paper is to compare the effect on output of spatial price discrimination with that of simple free on board (f.o.b.) pricing. A possible conclusion would be that if discrimination does not increase output, such pricing is undesirable from the standpoint of social welfare even though it proves to be more profitable for the spatial monopolist. Current subject matter interest thus reflects the question whether the discriminatory delivered price level of the spatial monopolist is high or low relative to the set of delivered prices resulting from a policy of f.o.b. mill pricing. The problem is, therefore, closely related to the discussion by economist A. C. Pigou-Joan Robinson and Edgar Edwards of outputs produced by a discriminatory and nondiscriminatory monopolist. Their formulations of the problem were, unfortunately, too general to provide clear answers to specific questions such as whether or not the existence of economic space helps yield greater or lesser outputs under discrimination than does simple monopoly pricing. This article seeks to answer this and related questions precisely by presenting a proof that monopoly outputs are always greater under spatial price discrimination than they are under simple f.o.b. mill pricing.
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