Document Type
Discussion Paper
Publication Date
1-18-2024
CFDP Number
2376
CFDP Pages
33
Journal of Economic Literature (JEL) Code(s)
D42, D83, L12
Abstract
We analyze the welfare impact of a monopolist able to segment a multiproduct market and offer differentiated price menus within each segment. We characterize a family of extremal distributions such that all achievable welfare outcomes can be reached by selecting segments from within these distributions. This family of distributions arises as the solution to the consumer maximizing distribution of values for multigood markets. With these results, we analyze the effect of segmentation on consumer surplus and prices in both interior and extremal markets, including conditions under which there exists a segmentation benefiting all consumers. Finally, we present an efficient algorithm for computing segmentations.
Recommended Citation
Bergemann, Dirk; Heumann, Tibor; and Wang, Michael C., "A Unified Approach to Second and Third Degree Price Discrimination" (2024). Cowles Foundation Discussion Papers. 2778.
https://elischolar.library.yale.edu/cowles-discussion-paper-series/2778