Price Discrimination and Price Dispersion in a Duopoly

39 Pages Posted: 6 Nov 1998

See all articles by Tommaso M. Valletti

Tommaso M. Valletti

Imperial College Business School; Centre for Economic Policy Research (CEPR)


This paper analyzes the problem of price discrimination in a market where consumers have heterogeneous preferences both over a horizontal parameter (brand) and a vertical one (quality). Discriminatory contracts are characterized for different market structures. It is shown that price dispersion, i.e., the observed range of prices for each class of customers, increases almost everywhere as competition is introduced in the market. The findings are discussed with reference to the U.K. mobile telecommunications market.

JEL Classification: D43, L13

Suggested Citation

Valletti, Tommaso M., Price Discrimination and Price Dispersion in a Duopoly. FEEM Working Paper ETA 33.98. Available at SSRN: or

Tommaso M. Valletti (Contact Author)

Imperial College Business School ( email )

South Kensington Campus
Exhibition Road
London SW7 2AZ, SW7 2AZ
United Kingdom

Centre for Economic Policy Research (CEPR)

United Kingdom

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