1. Partial price discrimination by an upstream monopolist
- Author
-
Lluís Bru, Ramón Faulí-Oller, Joel Sandonís, Universidad de Alicante. Departamento de Fundamentos del Análisis Económico, and Microeconomía Aplicada (GIMA)
- Subjects
Preisdifferenzierung ,TheoryofComputation_MISCELLANEOUS ,Mid price ,Price discrimination ,price discrimination ,Microeconomics ,Price discrimination, input markets ,ddc:330 ,Economics ,Downstream (petroleum industry) ,L12 ,Upstream (petroleum industry) ,Fundamentos del Análisis Económico ,business.industry ,input markets ,Factor price ,L11 ,TheoryofComputation_GENERAL ,jel:L11 ,jel:L12 ,Reservation price ,jel:D4 ,D4 ,business ,General Economics, Econometrics and Finance ,Theorie ,Limit price ,Monopol ,Public finance - 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. Financial support from SEJ 2004-02172, SEJ 2007-67895, SEJ 2007-62656, FEDER funds and the IVIE is gratefully acknowledged.
- Published
- 2010