Download This PaperNeutrality of Third-Degree Price Discrimination
International Review of Economics Education
13 Pages Posted: 16 Jun 2020 Last revised: 30 Dec 2020
Date Written: December 29, 2020
Abstract
This note shows that compared to uniform pricing, third-degree price discrimination can be neutral. For linear demands, having all price intercepts of submarkets’ inverse demands to be the same is the necessary and sufficient condition for third-degree price discrimination to be neutral. For general demands, when all submarkets’ demands are proportional to each other, not only will all the submarkets be served under uniform pricing, but all prices before and after price discrimination will be the same.
Keywords: Third-degree Price Discrimination, Neutrality, Price Intercept
JEL Classification: A22, D42, D61, L40
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