TITLE

Third-Degree Price Discrimination in the Presence of Asymmetric Consumption Externalities

AUTHOR(S)
Ikeda, Takeshi; Nariu, Tatsuhiko
PUB. DATE
September 2009
SOURCE
Journal of Industry, Competition & Trade;Sep2009, Vol. 9 Issue 3, p251
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
In this paper, we consider third-degree price discrimination in two markets in the presence of asymmetric consumption externalities; we establish that under plausible conditions, a firm reduces its price in the market with low price elasticity of demand. The firm can increase its profits by reducing the price for these consumers and enlarging the demand for other consumers, provided that positive consumption externalities exist. Moreover, we show that third-degree price discrimination enhances not only the firm’s profit but also total consumer surplus.
ACCESSION #
43520753

 

Related Articles

  • Competitive Screening Under Heterogeneous Information. Garrett, Daniel F; Gomes, Renato; Maestri, Lucas // Review of Economic Studies;Jul2019, Vol. 86 Issue 4, p1590 

    We study the interplay between informational frictions and second-degree price discrimination. Our theory recognizes that consumers differ in their tastes for quality as well as in the information they possess about available offers, which leads to dispersion over price–quality menus in...

  • Optimal Pricing with Asymmetric Demands of Senders and Receivers.  // International Journal of Business;Jan2011, Vol. 16 Issue 1, p1 

    No abstract available.

  • Current economic conditions.  // Canadian Economic Observer;Sep2006, Vol. 19 Issue 9, p1.1 

    The article reports on the economic conditions of Canada as of September 2006. Household spending slowed due to declines for autos and housing. The current account surplus was cut in half to $4.2 billion in the second quarter due to the falling surplus in merchandise trade. Exports rebounded...

  • Drèze equilibria and welfare maxima. Dierker, Egbert; Dierker, Hildegard // Economic Theory;Oct2010, Vol. 45 Issue 1/2, p55 

    We present an example of a production economy with incomplete markets, von Neumann–Morgenstern utility functions, and a unique Drèze equilibrium in order to illustrate and explain the following phenomenon. There exists a transfer scheme such that every shareholder’s utility...

  • Takeovers and cooperatives: governance and stability in non-corporate firms. Kelsey, David; Milne, Frank // Journal of Economics;Apr2010, Vol. 99 Issue 3, p193 

    If consumers wholly or partially control a firm with market power they will charge less than the profit maximizing price. Starting at the usual monopoly price, a small price reduction will have a second order effect on profits but a first order effect on consumer surplus. Despite this desirable...

  • Profits for Progress? Hinchberger, Bill // International Trade Forum;2004, Issue 1, p25 

    The article focuses on the consumers that gain access to more information about business practices. Large companies who fail to keep into account the consideration of these customers are sure to lose their profits in the present day world. The trend, as discussions at the World Economic Forum's...

  • Consumers using their discretion.  // BRW;9/13/2012, Vol. 34 Issue 36, p55 

    The article focuses on the discretionary spending by Australian consumers which led to the decline in profits of some companies in 2012.

  • Consumers reap the benefits of grocery deflation and price competition.  // MarketWatch: Global Round-up;Jan2006, Vol. 5 Issue 1, p61 

    The article presents information on the consumers benefits due to the grocery deflation and severe price competition. According to a new research by retail specialists verdict, consumers have been taking benefits and savings for the last three years and by the end of year 2006 UK consumers would...

  • Imperfect Price Discrimination and Welfare. Chiang, Raymond; Spatt, Chester S. // Review of Economic Studies;Apr82, Vol. 49 Issue 2, p155 

    We develop a model in which a monopolist uses differences across consumers in their valuation of time to imperfectly price discriminate. Though it is customary to analyse price discrimination problems by the calculus of variations after postulating a continuum of types, we assume a finite number...

Share

Read the Article

Courtesy of THE LIBRARY OF VIRGINIA

Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics