2003•Unpublished venueRequires access
Tactics of Price Discrimination and Welfare Effects
GE Jie-gen
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Abstract
Under perfect competitive market the competitive equilibrium may realize Pareto efficiency, but it is difficult for monopolistic market to provide the level of output at which price equals marginal cost, therefore, the output and price it chooses are not optimal to a society. Monopolistic firm must sort consumers on the basis of some endogenous and exogenous category in order for price discrimination to be a viable strategy. Due to the difference of pricing tactics, different kinds of price discrimination produce different welfare effects.