1. Partial price discrimination by an upstream monopolist
- Author
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Universidad de Alicante. Departamento de Fundamentos del Análisis Económico, Bru, Lluís, Fauli-Oller, Ramon, Sandonis, Joel, Universidad de Alicante. Departamento de Fundamentos del Análisis Económico, Bru, Lluís, Fauli-Oller, Ramon, and Sandonis, Joel
- Abstract
We analyze third degree price discrimination by an upstream monopolist to a continuum of heterogeneous downstream firms. The novelty of our approach is to recognize that customizing prices may be costly. As a consequence, partial price discrimination arises in equilibrium; in particular, we show that inefficient downstream firms receive personalized prices whereas efficient firms are charged a uniform price. The extreme cases of complete price discrimination and uniform price arise in our setting as particular cases, depending on the cost of customizing prices.
- Published
- 2011