Stable Market Segmentation Against Price Discrimination

53 Pages Posted: 22 Feb 2024

See all articles by Zhonghong Kuang

Zhonghong Kuang

Renmin University of China - School of Economics

Sanxi Li

Renmin University of China - School of Economics

Yi Liu

Tsinghua University

Yang Yu

Tsinghua University

Multiple version iconThere are 2 versions of this paper

Abstract

According to current data regulations, consumers are mobile among different markets, which endogenizes market segmentation. Considering such strategic interactions, we say that a market segmentation is stable if no consumer has an incentive to deviate to another market. We show that in every stable market segmentation, the producer surplus remains at the uniform monopoly level, and the consumer surplus falls between the buyer-optimal level and the uniform monopoly level. Remarkably, no consumer is worse off than in the case of uniform monopoly. Therefore, our results justify the Pareto optimum of price discrimination and reveal the welfare implications of current regulations.

Keywords: Price discrimination, Market segmentation, Right to Be Forgotten, Strategic consumer, Welfare

Suggested Citation

Kuang, Zhonghong and Li, Sanxi and Liu, Yi and Yu, Yang, Stable Market Segmentation Against Price Discrimination. Available at SSRN: https://ssrn.com/abstract=4734806 or http://dx.doi.org/10.2139/ssrn.4734806

Zhonghong Kuang

Renmin University of China - School of Economics ( email )

No. 59, Zhongguancun Street
Beijing, Beijing 100872
China

Sanxi Li (Contact Author)

Renmin University of China - School of Economics ( email )

No. 59, Zhongguancun Street
Beijing, Beijing 100080
China

Yi Liu

Tsinghua University ( email )

Beijing, 100084
China

Yang Yu

Tsinghua University ( email )

Beijing, 100084
China

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
48
Abstract Views
163
PlumX Metrics