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Monopoly Price Discrimination and Demand Curvature.

This paper presents a general analysis of the effects of monopolistic third-degree price discrimination on welfare and output when all markets are sewed. Sufficient conditions — involving straightforward comparisons of the curvatures of the direct and inverse demand functions in the different market...

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Published in:American Economic Review Vol. 100; no. 4; pp. 1601 - 1616
Main Authors: Aguirre, Iñaki, Cowan, Simon, Vickers, John
Format: Article
Published: American Economic Association September 2010
Subjects:
Monopolies
Price discrimination
Mathematical models of economic competition
Mathematical models of economics
Welfare economics
Economic demand
Mathematical models
Online Access:View this record in EBSCOhost
Summary:This paper presents a general analysis of the effects of monopolistic third-degree price discrimination on welfare and output when all markets are sewed. Sufficient conditions — involving straightforward comparisons of the curvatures of the direct and inverse demand functions in the different markets — are presented for discrimination to have negative or positive effects on social welfare and output. Reprinted by permission of the publisher.