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.

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Economics Commons

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