Tuesday, January 19, 2010
Posted by D. Daniel Sokol
Iñaki Aguirre (UPV/EHU), Simon Cowan (University of Oxford) and John Vickers (All Souls College, Oxford) explain Monopoly Price Discrimination and Demand Curvature.
ABSTRACT: This paper presents a general analysis of the effects of monopolistic third-degree price discrimination on welfare and oputput when all markets are served. 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.