Price Discrimination in Input Markets: Quantity Discounts and Private Information

Arbeitspapier

We consider a monopolistic supplier’s optimal choice of wholesale tariffs when downstream firms are privately informed about their retail costs. Under discriminatory pricing, downstream firms that differ in their ex ante distribution of retail costs are offered different tariffs. Under uniform pricing, the same wholesale tariff is offered to all downstream firms. In contrast to the extant literature on thirddegree price discrimination with nonlinear wholesale tariffs, we find that banning discriminatory wholesale contracts—the usual legal practice in the EU and US— often is beneficial for social welfare. This result is shown to be robust even when the upstream supplier faces competition in the form of fringe supply.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Munich Discussion Paper ; No. 2011-18

Classification and Topics

• Classification: Wirtschaft ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Production, Pricing, and Market Structure; Size Distribution of Firms ; Vertical Restraints; Resale Price Maintenance; Quantity Discounts
• Subject: Asymmetric Information ; InputMarkets ; Quantity Discounts ; Price Discrimination ; Screening ; Vertical Contracting ; Lieferantenmanagement ; Preisdifferenzierung ; Vorleistungen ; Markteintritt ; Marktstruktur ; Wohlfahrtsanalyse ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Herweg, Fabian ; Müller, Daniel
• Event: Veröffentlichung
• (who): Ludwig-Maximilians-Universität München, Volkswirtschaftliche Fakultät
• (where): München
• (when): 2011

Further information

• DOI: doi:10.5282/ubm/epub.12414
• Handle: http://hdl.handle.net/10419/104344
• URN: urn:nbn:de:bvb:19-epub-12414-4
• Last update: 10.03.2025, 11:41 AM CET