A Conduct Parameter Model of Price Discrimination

11 Pages Posted: 2 Feb 2017 Last revised: 7 Apr 2017

See all articles by Levent Kutlu

Levent Kutlu

University of Texas Rio Grande Valley

Date Written: April 6, 2017

Abstract

We consider a conduct parameter model where firms price discriminate based on the consumers' willingness to pay. For any conduct, the average price is invariant to the extent of price discrimination. Moreover, when the number of prices goes to infinity, there is a linear relationship between market power, measured by conduct, and range of offered prices. Hence, when the firms face competition, some of the high valuation customers are charged below their valuations, which contrasts with perfect price discrimination results for a monopoly.

Keywords: Price Discrimination, Oligopoly, Conduct parameter

JEL Classification: D43, L11, L13

Suggested Citation

Kutlu, Levent, A Conduct Parameter Model of Price Discrimination (April 6, 2017). Available at SSRN: https://ssrn.com/abstract=2909982 or http://dx.doi.org/10.2139/ssrn.2909982

Levent Kutlu (Contact Author)

University of Texas Rio Grande Valley ( email )

1201 West University Dr
Edinburg, TX TX 78539
United States

HOME PAGE: http://https://faculty.utrgv.edu/levent.kutlu/

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