Document Type
Discussion Paper
Publication Date
11-12-2023
CFDP Number
2373
CFDP Pages
58
Journal of Economic Literature (JEL) Code(s)
C72, D44, D82, D83
Abstract
A number of producers of heterogeneous goods with heterogeneous costs compete in prices. When producers know their own production costs and consumers know their values, consumer surplus and total surplus are aligned: the information structure and equilibrium that maximize consumer surplus also maximize total surplus. We report when alignment extends to the case where either consumers are uncertain about their own values or producers are uncertain about their own costs, and we also give examples showing when it does not. Less information for either producers or consumers may intensify competition in a way that benefits consumers but results in inefficient production.
Recommended Citation
Bergemann, Dirk; Brooks, Benjamin; and Morris, Stephen, "On the Alignment of Consumer Surplus and Total Surplus Under Competitive Price Discrimination" (2023). Cowles Foundation Discussion Papers. 2775.
https://elischolar.library.yale.edu/cowles-discussion-paper-series/2775