IDEAS home Printed from https://ideas.repec.org/a/wly/soecon/v76y2009i2p500-512.html
   My bibliography  Save this article

Price Discrimination and Efficient Distribution

Author

Listed:
  • T. Randolph Beard
  • Roger D. Blair
  • David L. Kaserman
  • Michael L. Stern

Abstract

This paper focuses on third‐degree price discrimination by an upstream firm with some degree of monopoly power. Downstream firms fall into two categories: efficient and inefficient, according to their relative costs of transforming a unit of the upstream good into a unit of final product. Under ordinary static conditions, price discrimination favors the inefficient firms, which have more elastic demands. We consider, however, the possibility that discrimination in the opposite direction can alter the downstream market structure toward greater efficiency. Discriminatory pricing, then, involves charging a higher price to the less efficient firms. Such pricing is shown to be both potentially profitable for the upstream firm and welfare improving as average consumer prices fall.

Suggested Citation

  • T. Randolph Beard & Roger D. Blair & David L. Kaserman & Michael L. Stern, 2009. "Price Discrimination and Efficient Distribution," Southern Economic Journal, John Wiley & Sons, vol. 76(2), pages 500-512, October.
    • Handle: RePEc:wly:soecon:v:76:y:2009:i:2:p:500-512
    DOI: 10.4284/sej.2009.76.2.500
    as

    Download full text from publisher

    File URL: https://doi.org/10.4284/sej.2009.76.2.500
    Download Restriction: no
    File URL: https://libkey.io/10.4284/sej.2009.76.2.500?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:soecon:v:76:y:2009:i:2:p:500-512. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)2325-8012 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.