Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

A Member of the Law Professor Blogs Network

Monday, August 5, 2013

Welfare-increasing third-degree price discrimination

Posted by D. Daniel Sokol

Simon Cowan (Oxford) has posted Welfare-increasing third-degree price discrimination.

ABSTRACT: The welfare and output effects of monopoly third-degree price discrimination are analyzed when inverse demand functions are parallel. Welfare is higher with discrimination than with a uniform price when demand functions are derived from the logistic distribution, and from a more general class of distributions. The sufficient condition in Varian (1985) for a welfare increase holds for these demand functions. Total output is higher with discrimination for a large set of demand functions including those derived from strictly log-concave distributions with increasing cost pass-through, such as the normal, logistic and extreme value, and standard log-convex demands.

http://lawprofessors.typepad.com/antitrustprof_blog/2013/08/welfare-increasing-third-degree-price-discrimination.html

| Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef0192ac1f63a2970d

Listed below are links to weblogs that reference Welfare-increasing third-degree price discrimination:

Comments

Post a comment