Partial price discrimination by an upstream monopolist
- Sandonís Díez, Joel
- Bru Martínez, Lluís
- Faulí Oller, Ramon
Año de publicación: 2006
Número: 3
Tipo: Documento de Trabajo
Resumen
We analyze third degree price discrimination by an upstream monopolistto a continuum of heterogeneous downstream firms. The novelty of ourapproach is to recognize that customizing prices may be costly, whichintroduces an interesting trade-off. As a consequence, partial pricediscrimination arises in equilibrium. In particular, we show that inefficientdownstream firms receive personalized prices whereas efficient firms arecharged a uniform price. The extreme cases of complete price discriminationand uniform price arise in our setting as particular cases, depending on the costof customizing prices.