Second-Degree Price Discrimination: A Graphical Approach to Welfare Applications

15 Pages Posted: 12 Apr 2006

See all articles by Chemi Gotlibovski

Chemi Gotlibovski

Academic College of Tel-Aviv Yafo

Nava Kahana

Bar-Ilan University - Department of Economics; IZA Institute of Labor Economics

Date Written: February 2006

Abstract

This paper uses a simple diagram to compare two pricing strategies: price-quantity packages, and a two-part tariff from the monopoly and from the welfare points of view. It is shown that in the two-type consumer case when the monopoly is concerned, the price-quantity packages strategy dominates two-part tariff pricing. However, the welfare may be higher under two-part tariff pricing, which cases are profiled.

Keywords: Second-degree price discrimination, welfare

JEL Classification: A22, D42, D6, L12

Suggested Citation

Gotlibovski, Chemi and Kahana, Nava, Second-Degree Price Discrimination: A Graphical Approach to Welfare Applications (February 2006). Available at SSRN: https://ssrn.com/abstract=895761 or http://dx.doi.org/10.2139/ssrn.895761

Chemi Gotlibovski

Academic College of Tel-Aviv Yafo ( email )

Israel

Nava Kahana (Contact Author)

Bar-Ilan University - Department of Economics ( email )

Ramat-Gan, 52900
Israel

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

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