Arbeitspapier
The welfare effects of third-degree price discrimination in a differentiated oligopoly
This paper studies the relationship between horizontal product differentiation and the welfare effects of third-degree price discrimination in oligopoly. By deriving linear demand from a representative consumer's utility and focusing on the symmetric equilibrium of a pricing game, we characterize the conditions relating to such demand properties as substitutability and complementarity for price discrimination to improve social welfare. In particular, we show that price discrimination can improve social welfare if firms' brands are substitutes in a market where the discriminatory price is higher and complements in one where it is lower, but welfare never improves in the reverse situation. We verify, however, that consumer surplus is never improved by price discrimination; welfare improvement by price discrimination is solely due to an increase in the firms' profits. This means that there is no chance that firms suffer from a prisoners' dilemma, that is, firms are better off by switching from uniform pricing to price discrimination.
- Sprache
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Englisch
- Erschienen in
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Series: ISER Discussion Paper ; No. 800
- Klassifikation
-
Wirtschaft
Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
Welfare Economics: General
Production, Pricing, and Market Structure; Size Distribution of Firms
Oligopoly and Other Imperfect Markets
- Thema
-
Third-Degree Price Discrimination
Oligopoly
Social Welfare
Horizontal Product Differentiation
Substitutability
Complementarity
Preisdifferenzierung
Konsumentenverhalten
Produktsubstitution
Oligopol
Theorie
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Adachi, Takanori
Matsushima, Noriaki
- Ereignis
-
Veröffentlichung
- (wer)
-
Osaka University, Institute of Social and Economic Research (ISER)
- (wo)
-
Osaka
- (wann)
-
2011
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:45 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Adachi, Takanori
- Matsushima, Noriaki
- Osaka University, Institute of Social and Economic Research (ISER)
Entstanden
- 2011