Price Discrimination, Competition and Welfare
A monopolist in one market is also an output-setting oligopolist in a separate market with the same demand and cost conditions. Should it be allowed to set a price in its monopoly market that differs from the price in the competitive market? When there is a single rival the regulated firm under uniform pricing restricts its output in the competitive market so that its market share is one-third. Social welfare is higher with uniform pricing. Welfare is also higher with uniform pricing if there is more than one rival despite the regulated firm selling nothing in the competitive market. Uniform pricing may promote entry and is socially preferred to discrimination in this case when demand is sufficiently convex. Similar results hold in a model where the competitive market has price-setting duopolists with differentiated products.
Date:
6 May 2025, 12:45
Venue:
Nuffield College, New Road OX1 1NF
Venue Details:
Butler Room
Speaker:
Simon Cowan (University of Oxford)
Organising department:
Department of Economics
Part of:
Economic Theory Workshop
Booking required?:
Not required
Audience:
Members of the University only
Editor:
Edward Clark
