Monday, November 15, 2010
Posted by D. Daniel Sokol
Iñaki Aguirre (Departamento de Fundamentos del Análisis Económico I, University of the Basque Country), Simon Cowan (Department of Economics, University of Oxford), and John Vickers (All Souls, University of Oxford) analyze Competition and cost pass-through in differentiated oligopolies.
ABSTRACT: This paper presents a general analysis of the effects of monopolistic third-degree price discrimination on welfare and output 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.