In this paper we propose a simple method of characterizing countervailing incentives in adverse selection problems. The key element in our characterization consists of analyzing properties of the full information problem. This allows solving the principal problem without using optimal control...

This paper presents new results on the welfare e¤ects of third-degree price discrimination under constant elasticity demand. We show that when both the share of the strong market under uniform pricing and the elasticity di¤erence between markets are high enough,then price discrimination not...

Based on a pioneering work by Ippolito (1980) we construct a simple model wich allows the welfare effects of third-degree price discrimination to be well understood and explained. The decomposition of the change in welfare into a misallocation effect and an output effect has advantages over the...

Published as an article in: American Economic Review, 2010, vol. 100, issue 4, pages 1601-15.

In this paper, we show that in order for third-degree price discrimination to increase total output, the demands of the strong markets should be, as conjectured by Robinson (1933), more concave than the demands of the weak markets. By making the distinction between adjusted concavity of the...

The paper investigates the effects on welfare of price discrimination when a multimarket seller faces competition in one of its two markets. With respect to uniform pricing, price discrimination changes competition in such a way, that even with linear demands, price discrimination can be...