ERIC Number: EJ744714
Record Type: Journal
Publication Date: 2006
Pages: 10
Abstractor: Author
ISBN: N/A
ISSN: ISSN-0022-0485
EISSN: N/A
Third-Degree Price Discrimination Revisited
Kwon, Youngsun
Journal of Economic Education, v37 n1 p83-92 Win 2006
The author derives the probability that price discrimination improves social welfare, using a simple model of third-degree price discrimination assuming two independent linear demands. The probability that price discrimination raises social welfare increases as the preferences or incomes of consumer groups become more heterogeneous. He derives the average revenue curve of the price-discriminating monopoly, corresponding to its aggregated marginal revenue curve. The curve is non-linear and lies above the aggregated demand curve of simple monopoly. The results may be used to explain to students the effects of third-degree price discrimination on market outcomes.
Descriptors: Consumer Economics, Microeconomics, Economics Education, Models, Probability, Well Being
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Publication Type: Journal Articles; Reports - Descriptive
Education Level: N/A
Audience: N/A
Language: English
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Authoring Institution: N/A
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