Competitive Price Discrimination

Posted: 16 Jan 2002

See all articles by Mark Armstrong

Mark Armstrong

University College London - Department of Economics

John Vickers

University of Oxford - Department of Economics

Abstract

We model firms as supplying utility directly to consumers. The equilibrium outcome of competition in utility space depends on the relationship pi(u) between profit and average utility per consumer. Public policy constraints on the "deals" firms may offer affect equilibrium outcomes via their effect on pi(u). From this perspective we examine the profit, utility, and welfare implications of price discrimination policies in an oligopolistic framework. We also show that an equilibrium outcome of competitive nonlinear pricing when consumers have private information about their tastes is for firms to offer efficient two-part tariffs.

Suggested Citation

Armstrong, Mark and Vickers, John, Competitive Price Discrimination. Available at SSRN: https://ssrn.com/abstract=290606

Mark Armstrong (Contact Author)

University College London - Department of Economics ( email )

Gower Street
London WC1E 6BT, WC1E 6BT
United Kingdom

John Vickers

University of Oxford - Department of Economics ( email )

Manor Road Building
Manor Road
Oxford, OX1 3BJ
United Kingdom

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