[This paper examines third-degree price discrimination by an intermediate good monopolist selling to downstream firms that differ in their abilities to integrate backward into supply of the input. It is shown that discrimination may lead to all buyers facing higher prices, and conditions under which discrimination reduces welfare by lowering total output are presented. It is shown that discrimination may raise welfare in some cases by preventing socially inefficient backward integration.]

We study the rivalry between two firms to develop an innovation in a dynamic setting that allows for postdevelopment dissemination of the innovation, such as licensing or imitation. This dissemination may cause the noninnovating firm to benefit from the discovery. When this occurs, conventional results in the economics of R & D no longer need apply. We find that industry leaders will tend to develop minor innovations, but will develop major innovations only if imitation is difficult.

Properties are derived for the profit-maximizing price schedule in a market where the firm can observe the size of any given purchase, but cannot directly observe the number of purchases made by any given consumer. In such a market, A consumer may make multiple purchases to minimize the amount paid for a given quantity of the good. It is shown that when purchase numbers are unobservable the schedule may entail quantity premia and may be strikingly different from the schedule that obtains when the numbers of purchases are observable. In particular, some individuals may consume more under the profit-maximizing outcome than under the first-best outcome.

A monopolist may earn greater profits by setting a nonuniform price schedule (one in which the price varies with the quantity purchased) than by charging a uniform price. In general, the profit maximizing non-uniform price schedule and the welfare maximizing schedule do not coincide. Thus, there may be scope for improving market performance through regulation. The paper considers a regulator who has limited information and authority. The issues addressed centre around the question of whether the level of total market output can be taken as a measure of market performance. Conditions under which welfare is a monotonic function of the level of total output are derived. 1.

We analyze technology adoption in industries where network externalities are significant. The pattern of adoption depends on whether technologies are sponsored. A sponsor is an entity that has property rights to the technology and hence is willing to make investments to promote it. Key findings include the following: (1) compatibility tends to be undersupplied by the market, but excessive standardization can occur; (2) in the absence of sponsors, the technology superior today has a strategic advantage and is likely to dominate the market; (3) when one of two rival technologies is sponsored, that technology has a strategic advantage and may be adopted even if it is inferior; (4) when two competing technologies both are sponsored, the technology that will be superior tomorrow has a strategic advantage.

Introduction Get access Lawrence F. Katz Lawrence F. Katz Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 107, Issue 1, February 1992, Page i, https://doi.org/10.2307/2118321 Published: 01 February 1992

[I examine the effects of price discrimination on the equilibrium prices, number of firms, and level of total surplus in a monopolistically competitive market. The main finding is that uniform pricing is more (less) efficient than is price discrimination when the purchases made by the consumers who are discriminated against constitute a small (large) proportion of the total purchases.]

The author examines third-degree price discrimination by an upstream monopolist in an intermediate good market. Discrimination is motivated by the fact that downstream firms differ in their abilities to integrate backward into supply of the input. The author shows that under reasonable specifications of equilibrium, price discrimination leads to all buyers facing higher input prices. In other cases, discrimination raises some prices and lowers others. The author derives conditions under which discrimination lowers welfare by reducing total output and shows that in some markets discrimination will raise welfare by preventing socially inefficient backward integration. Copyright 1987 by American Economic Association.