Monopoly Price Discrimination With Constant Elasticity Demand

Iñaki Aguirre and Simon G. Cowan
Economic Theory Bulletin, 3, 329-340

Abstract

This paper presents new results on the welfare effects of third-degree price discrimination under constant elasticity demand. We show that when both the share of the strong market under uniform pricing and the elasticity difference between markets are high enough, then price discrimination not only can increase social welfare but also consumer surplus. We also obtain new bounds on the welfare change for log-convex demands.

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