Monopoly Price Discrimination and Demand Curvature

Author: Aguirre Iñaki   Cowan Simon   Vickers John  

Publisher: American Economic Association

ISSN: 0002-8282

Source: The American Economic Review, Vol.100, Iss.4, 2010-09, pp. : 1601-1615

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Abstract

This paper presents a general analysis of the effects of monopolistic thirddegree 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.