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A problem with the course presentation of the single-price alternative to 3rd-degree price discrimination

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  • M Borland
  • R Howson

Abstract

The typical procedure for the determination of output, price, and profit associated with the single-price alternative to 3rd-degree price discrimination found in intermediate texts, managerial texts, and other texts concerned with pricing works well under certain specifications with respect to revenue and cost, but not all. It is oversimplified and, as such, unreliable for the determination of output, price, and profit, dependent on arbitrary, but specific, choices of values for the parameters of associated revenue and cost functions; and is, therefore, at least non-general. Suggestions for course presentation of the single-price alternative, given the reconsideration of the procedure for the determination of output, price, and profit and the computation of a discriminating critical value developed in this paper, are easily inferred. Illustrations are provided throughout.

Suggested Citation

  • M Borland & R Howson, 2016. "A problem with the course presentation of the single-price alternative to 3rd-degree price discrimination," Economic Issues Journal Articles, Economic Issues, vol. 21(1), pages 87-97, March.
    • Handle: RePEc:eis:articl:116borland
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    References listed on IDEAS

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    1. Youngsun Kwon, 2006. "Third-Degree Price Discrimination Revisited," The Journal of Economic Education, Taylor & Francis Journals, vol. 37(1), pages 83-92, January.
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    3. Kathleen Carroll & Dennis Coates, 1999. "Teaching Price Discrimination: Some Clarification," Southern Economic Journal, John Wiley & Sons, vol. 66(2), pages 466-480, October.
    4. Layson, Stephen K, 1994. "Market Opening under Third-Degree Price Discrimination," Journal of Industrial Economics, Wiley Blackwell, vol. 42(3), pages 335-340, September.
    5. Jerry A. Hausman & Jeffrey K. MacKie-Mason, 1988. "Price Discrimination and Patent Policy," RAND Journal of Economics, The RAND Corporation, vol. 19(2), pages 253-265, Summer.
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