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THE WELFARE ASPECTS OF SPATIAL PRICING POLICIES RECONSIDERED FOR A MONOPOLY CASE *
Author(s) -
Palma André,
Liu Qin
Publication year - 1993
Publication title -
journal of regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.171
H-Index - 79
eISSN - 1467-9787
pISSN - 0022-4146
DOI - 10.1111/j.1467-9787.1993.tb00206.x
Subject(s) - monopoly , price discrimination , economics , microeconomics , welfare , economic surplus , differential (mechanical device) , social welfare , consumer welfare , mill , market economy , mechanical engineering , political science , law , engineering , aerospace engineering
. We reexamine the price structures and their welfare implications in three pricing regimes (mill, uniform and discriminatory) for a monopoly. We show that spatial price discrimination could provide the highest social welfare and, when consumers tastes are heterogeneous enough, also the highest consumer surplus. The superiority of spatial price discrimination is partially due to the larger output produced and partially due to differential treatment for consumers with heterogeneous tastes.