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The degree of distortions under second-degree price discrimination

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  • Chao, Yong
  • Nahata, Babu

Abstract

Under second-degree price discrimination, both types of consumers get efficient quantities when the net-of-cost valuation functions intersect at least once at some positive quantity and the point of intersection lies between the two peaks. Distortions can be upward or downward.

Suggested Citation

  • Chao, Yong & Nahata, Babu, 2015. "The degree of distortions under second-degree price discrimination," Economics Letters, Elsevier, vol. 137(C), pages 208-213.
    • Handle: RePEc:eee:ecolet:v:137:y:2015:i:c:p:208-213
    DOI: 10.1016/j.econlet.2015.11.013
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    References listed on IDEAS

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    1. Armstrong, Mark, 1996. "Multiproduct Nonlinear Pricing," Econometrica, Econometric Society, vol. 64(1), pages 51-75, January.
    2. Dirk Bergemann & Benjamin Brooks & Stephen Morris, 2015. "The Limits of Price Discrimination," American Economic Review, American Economic Association, vol. 105(3), pages 921-957, March.
    3. Andersson, Tommy, 2008. "Efficiency properties of non-linear pricing schedules without the single-crossing condition," Economics Letters, Elsevier, vol. 99(2), pages 364-366, May.
    4. Kokovin, Sergey & Nahata, Babu & Zhelobodko, Evgeny, 2013. "Dupuit conjecture for constrained screening: Overall distortion and type-partitioning," Economics Letters, Elsevier, vol. 118(3), pages 439-441.
    5. Nahata, Babu & Ringbom, Staffan, 2007. "Price discrimination using linear and nonlinear pricing simultaneously," Economics Letters, Elsevier, vol. 95(2), pages 267-271, May.
    6. Stole, Lars A., 2007. "Price Discrimination and Competition," Handbook of Industrial Organization, in: Mark Armstrong & Robert Porter (ed.), Handbook of Industrial Organization, edition 1, volume 3, chapter 34, pages 2221-2299, Elsevier.
    7. Andersson, Tommy, 2005. "Profit maximizing nonlinear pricing," Economics Letters, Elsevier, vol. 88(1), pages 135-139, July.
    8. Babu Nahata & Serguei Kokovin & Evgeny Zhelobodko, 2003. "Package Sizes, Tariffs, Quantity Discount and Premium," General Economics and Teaching 0307002, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Yong Chao & Babu Nahata, 2018. "Market foreclosure, output and welfare under second-degree price discrimination," Economics Bulletin, AccessEcon, vol. 38(4), pages 2116-2127.
    2. Brendan Cushing-Daniels, 2020. "Rethinking Profit-Maximization in Second-Degree Price Discriminating Markets," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 48(2), pages 223-235, June.
    3. Winston W. Chang & Tai-Liang Chen, 2018. "A Pedagogical Note on Multitier Pricing Scheme," The American Economist, Sage Publications, vol. 63(2), pages 228-244, October.
    4. Ram Orzach & Miron Stano, 2021. "On the degree of distortions under second-degree price discrimination," The Journal of Mechanism and Institution Design, Society for the Promotion of Mechanism and Institution Design, University of York, vol. 6(1), pages 101-112, December.

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    More about this item

    Keywords

    Second-degree price discrimination; Degree of distortions; No exclusion; Upward distortion;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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