American Economic Review Vol. 77 No. 1 1987
The Welfare Effects of Third-Degree Price Discrimination in Intermediate Good Markets
Abstract
[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.]
- Volume
- 77
- Issue
- 1
- Pages
- 154-167
- Sources
- bibtex:phds-export.bib