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Introduction

In: Recent Advances in the Theory of Third-Degree Price Discrimination

Author

Listed:
  • Takanori Adachi

    (Kyoto University)

  • Ryo Hashizume

    (Hannan University)

  • Takeshi Ikeda

    (Daito Bunka University)

  • Tatsuhiko Nariu

    (Doshisha University)

  • Tomohisa Okada

    (Daito Bunka University)

Abstract

This chapter introduces the basic economic logic behind third-degree price discrimination. We first verify the sources of inefficiency accrued from discriminatory pricing and explain the well-known result in literature: an increase in aggregate output is necessary for price discrimination to increase social welfare. We then consider how externalities on the demand side affect this result. Price discrimination can “open a market” by providing a group of consumers with a good that does not purchase it otherwise. This issue is also discussed in relation to welfare evaluation.

Suggested Citation

  • Takanori Adachi & Ryo Hashizume & Takeshi Ikeda & Tatsuhiko Nariu & Tomohisa Okada, 2023. "Introduction," SpringerBriefs in Economics, in: Recent Advances in the Theory of Third-Degree Price Discrimination, chapter 0, pages 2-14, Springer.
    • Handle: RePEc:spr:spbchp:978-981-99-3205-4_1
    DOI: 10.1007/978-981-99-3205-4_1
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