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
SN - 0931-8658
VL - 78
SP - 205
EP - 222
JO - Journal of Economics/ Zeitschrift fur Nationalokonomie
JF - Journal of Economics/ Zeitschrift fur Nationalokonomie
ER -