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Monopolistic third-degree price discrimination, customer’s patience and welfare

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  • Xingtang Wang

    (Institute of Guangdong-Hong Kong-Macau Great Bay Area, Guangdong University of Foreign Studies)

Abstract

Consumers are strategic; they choose whether to buy products now or later. In a two-period game-theoretical model, we examine the effects of third-degree price discrimination on the market, as well as the role of consumer patience in shaping these effects. When product quality is endogenous, we find that third-degree price discrimination will bring higher consumer surplus and social welfare if consumer patience is high. When the quality is exogenous, we find that third-degree price discrimination increases firm profit, and reduces consumer surplus and social welfare. The consumer patience will reduce the effect of third-degree price discrimination. This paper expands the theoretical research on the effect of third-degree price discrimination on the market from the perspective of consumer behavior.

Suggested Citation

  • Xingtang Wang, 2025. "Monopolistic third-degree price discrimination, customer’s patience and welfare," Journal of Economics, Springer, vol. 144(3), pages 269-285, April.
    • Handle: RePEc:kap:jeczfn:v:144:y:2025:i:3:d:10.1007_s00712-024-00893-8
    DOI: 10.1007/s00712-024-00893-8
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    More about this item

    Keywords

    Third-degree price discrimination; Customer’s patience; Consumer surplus; Social welfare;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies

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