The cost effect in third-degree price discrimination

In the presence of a non-constant marginal cost and demand uncertainty, we show that an output increase is no longer a necessary condition for welfare to increase following the introduction of third-degree price discrimination. We thus highlight the existence of an effect that might offset the well known output and misallocation effects of price discrimination. We propose a specific example where this is indeed the case. Copyright Springer-Verlag Wien 2014

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Year of publication:	2014
Authors:	Galera, Francisco ; Kinateder, Markus ; Mendi, Pedro
Published in:	Journal of Economics. - Springer. - Vol. 113.2014, 2, p. 175-186
Publisher:	Springer
Subject:	Monopoly \| Third-degree price discrimination \| Uncertainty \| Welfare \| Cost effect

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Type of publication:	Article
Source:	RePEc - Research Papers in Economics

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