TY - JOUR

T1 - Random price discrimination

AU - Colombo, Ferdinando

PY - 2003

Y1 - 2003

N2 - When a monopolist randomly sorts customers, price discrimination "concavifies"
the revenue function of the firm, so that it may be optimal for a monopolist
to divide customers into groups that have the same demand function and charge
them different prices. It is impossible to rule out this type of result whenever the revenue function is somewhere convex in the "economically relevant" set of quantities, because there always exists a non-decreasing cost function that leads to that conclusion. It is also impossible to rule out the case where, with respect to
monopoly, the firm raises or lowers price to all classes and, accordingly, the case where the social welfare decreases or increases.

AB - When a monopolist randomly sorts customers, price discrimination "concavifies"
the revenue function of the firm, so that it may be optimal for a monopolist
to divide customers into groups that have the same demand function and charge
them different prices. It is impossible to rule out this type of result whenever the revenue function is somewhere convex in the "economically relevant" set of quantities, because there always exists a non-decreasing cost function that leads to that conclusion. It is also impossible to rule out the case where, with respect to
monopoly, the firm raises or lowers price to all classes and, accordingly, the case where the social welfare decreases or increases.

KW - "concavification" of the revenue function

KW - increasing marginal revenue

KW - monopoly

KW - random selection of classes

KW - third-degree price discrimination

KW - "concavification" of the revenue function

KW - increasing marginal revenue

KW - monopoly

KW - random selection of classes

KW - third-degree price discrimination

UR - http://hdl.handle.net/10807/24511

M3 - Article

VL - 78

SP - 205

EP - 222

JO - Journal of Economics/ Zeitschrift fur Nationalokonomie

JF - Journal of Economics/ Zeitschrift fur Nationalokonomie

SN - 0931-8658

ER -