Arbeitspapier
When is price discrimination profitable?
We analyze a model of a quality-constrained monopolist's product line decision that encompasses a variety of important examples of second-degree price discrimination, including intertemporal price discrimination, coupons, advance purchase discounts, versioning of information goods, and damaged goods. We derive necessary and sufficient conditions for price discrimination to be profitable that generalize existing results in the literature. Specifically, we show that when a continuum of product qualities are feasible, price discrimination is profitable if and only if the ratio of the marginal social value from an increase in quality to the total social value of the good is increasing in consumers' willingness to pay. Unlike third-degree price discrimination, we show that second-degree price discrimination may result in a Pareto improvement. However, in general the welfare effects are ambiguous.
- Language
-
Englisch
- Bibliographic citation
-
Series: CSIO Working Paper ; No. 0072
- Classification
-
Wirtschaft
- Event
-
Geistige Schöpfung
- (who)
-
Anderson, Eric T.
Dana, James D.
- Event
-
Veröffentlichung
- (who)
-
Northwestern University, Center for the Study of Industrial Organization (CSIO)
- (where)
-
Evanston, IL
- (when)
-
2005
- Handle
- Last update
-
10.03.2025, 11:42 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Anderson, Eric T.
- Dana, James D.
- Northwestern University, Center for the Study of Industrial Organization (CSIO)
Time of origin
- 2005
Other Objects (12)
When Discrimination is Not Enough
When unionisation is profitable for firms in network industries
When unionisation is profitable for firms in network industries
Price Squeeze in Practice: Is it a Profitable Strategy?
When Randomization in Collective Tournaments is Profitable for the Principal
Third-Degree Price Discrimination in Oligopoly When Markets Are Covered
Third-degree price discrimination in oligopoly when markets are covered
Third‐Degree Price Discrimination in Oligopoly when Markets are Covered
Third-Degree Price Discrimination in Oligopoly When Markets Are Covered
Third-Degree Price Discrimination in Oligopoly When Markets Are Covered
Price-level targeting when there is price-level drift
Price-level targeting when there is price-level drift
When Discrimination is Not Enough
When unionisation is profitable for firms in network industries
When unionisation is profitable for firms in network industries
Price Squeeze in Practice: Is it a Profitable Strategy?
When Randomization in Collective Tournaments is Profitable for the Principal
Third-Degree Price Discrimination in Oligopoly When Markets Are Covered
Third-degree price discrimination in oligopoly when markets are covered
Third‐Degree Price Discrimination in Oligopoly when Markets are Covered
Third-Degree Price Discrimination in Oligopoly When Markets Are Covered
Third-Degree Price Discrimination in Oligopoly When Markets Are Covered
Price-level targeting when there is price-level drift
Price-level targeting when there is price-level drift
When Discrimination is Not Enough
When unionisation is profitable for firms in network industries
When unionisation is profitable for firms in network industries
Price Squeeze in Practice: Is it a Profitable Strategy?
When Randomization in Collective Tournaments is Profitable for the Principal
Third-Degree Price Discrimination in Oligopoly When Markets Are Covered
Third-degree price discrimination in oligopoly when markets are covered
Third‐Degree Price Discrimination in Oligopoly when Markets are Covered
Third-Degree Price Discrimination in Oligopoly When Markets Are Covered
Third-Degree Price Discrimination in Oligopoly When Markets Are Covered
Price-level targeting when there is price-level drift