Partial price discrimination by an upstream monopolist

• Lluís Bru ^[1] ; Ramon Faulí-Oller ^[2] ; Joel Sandonís ^[2]
  1. [1] Universitat de les Illes Balears

     Universitat de les Illes Balears

     Palma de Mallorca, España

     
  2. [2] Universitat d'Alacant

     Universitat d'Alacant

     Alicante, España

     
• Localización: SERIEs : Journal of the Spanish Economic Association, ISSN 1869-4195, Vol. 2, Nº. 2, 2011, págs. 217-231
• Idioma: inglés
• DOI: 10.1007/s13209-010-0030-7
• Enlaces
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• Resumen

  • We analyze third degree price discrimination by an upstream monopolist to a continuum of heterogeneous downstream firms. The novelty of our approach is to recognize that customizing prices may be costly. As a consequence, partial price discrimination arises in equilibrium; in particular, we show that inefficient downstream firms receive personalized prices whereas efficient firms are charged a uniform price. The extreme cases of complete price discrimination and uniform price arise in our setting as particular cases, depending on the cost of customizing prices.