Price discrimination and social welfare with correlated demand

Anam, Mahmudul; Chiang, Shin–Hwan

doi:10.1016/j.jebo.2004.10.006

Cited by 5 publications

(5 citation statements)

References 12 publications

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“…12 Welfare Analysis and Policy Implications of Bundling Decisions by Firms Anam and Chiang [18] show that third degree price discrimination ameliorates the problem of risk by allowing the risk averse company to diversify its risk between different goods. They show that the conventional direction of third degree price discrimination may be reversed because a good with more elastic demand, but more risk, may be charged a higher price.…”

Section: Pure Optimal Bundlingmentioning

confidence: 99%

Welfare Analysis and Policy Implications of Bundling Decisions by Firms

Dassiou

Glycopantis

2013

aeb

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This paper models an original approach where the monopolist firm no longer uses pure bundling with weights 1:1. The decisions of the firm take place in a two-step optimisation process. In the first stage, using portfolio optimisation it decides whether to bundle and also sets the optimal weight for each good. In the second stage, it sets the profit maximising bundle price on the basis of the chosen weights. We compare the profit, consumer and welfare implications of our pure bundling model to the usual 1:1 pure bundling model, and comment on the competition policy making implications.

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Section: Pure Optimal Bundlingmentioning

confidence: 99%

Welfare Analysis and Policy Implications of Bundling Decisions by Firms

Dassiou

Glycopantis

2013

aeb

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“…By setting prices for the di¤erent demand groups that determine their contribution in total demand, expected outputs are affected and through them expected costs. Anam and Chiang (2006) look at a risk averse monopolist. The …rm faces two di¤erent markets with stochastic and correlated demands.…”

Section: The Framework Of the Analysismentioning

confidence: 99%

Optimal Decisions in Two-stage Bundling

Dassiou¹,

Glycopantis²

2012

Recent Advances in the Analysis of Competition Policy and Regulation

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We develop a generalised framework for pure bundling where buyer tastes for two goods are assumed to follow a normal distribution. In the literature optimal bundling decisions have been considered under the assumption that the weights of the two goods are …xed and equal. The only consideration is then to choose the pro…t maximising optimal price. Our approach is di¤erent and much more realistic. The monopolist …rst decides on the optimal weights of the two goods and in the second stage derives the pro…t maximising bundle price. Welfare and policy implications of our approach are derived and comparisons are made with those of the …xed weights approach.

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“…Markets must be differentiated based on the nature of use, physical distance, and time. Similarly, the firm should have monopoly power [4].…”

Section: Introduction 1backgroundmentioning

confidence: 99%

“…The relationship between price discrimination and social welfare has been an ongoing debate for many years. The social eligibility of third-degree price discrimination has been a very important research topic since the pioneering analysis of the problem done by Robinson [4]. Many economists consider price discrimination a good policy to improve social welfare, and many economists are raising questions about the consumption ineffi- ciency resulting from price discrimination.…”

Section: Introduction 1backgroundmentioning

confidence: 99%

Does Price Discrimination Increase Social Welfare?

Poudel,

Nepal

2023

RoBES

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The process of charging a different price to a different group of consumers for similar goods and services is called price discrimination. The relationship between price discrimination and social welfare has been an important topic of research and discussion for many years. The purpose of the study is to determine the conditions under which price discrimination improves or reduces social welfare. The authors used a method of series of literature reviews to gather information about the relationship between price discrimination and social welfare. The study showed that price discrimination can improve social welfare if output is increased. The increase in output increases social benefits and overcomes the loss of welfare due to the inefficient distribution of products. The key conclusion is that the social benefits of price discrimination are the availability of essential services to low-income groups and the maintenance of equity in the consumption of public goods. This study has major implications for the formulation of a policy that introduces price discrimination to maintain equity among different income groups and ensure the availability of high-cost essential services.

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Price discrimination and social welfare with correlated demand

Cited by 5 publications

References 12 publications

Welfare Analysis and Policy Implications of Bundling Decisions by Firms

Welfare Analysis and Policy Implications of Bundling Decisions by Firms

Optimal Decisions in Two-stage Bundling

Does Price Discrimination Increase Social Welfare?

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