Open AccessOn the degree of distortions under second-degree price discrimination
Author(s) -
Ram Orzach,
AUTHOR_ID,
Miron Stano,
AUTHOR_ID
Publication year - 2021
Publication title -
journal of mechanism and institution design
Language(s) - English
Resource type - Journals
eISSN - 2399-8458
pISSN - 2399-844X
DOI - 10.22574/jmid.2021.12.004
Subject(s) - degree (music) , dispose pattern , price discrimination , econometrics , anomaly (physics) , nonlinear system , mathematics , economics , mathematical economics , computer science , microeconomics , physics , quantum mechanics , acoustics , programming language , condensed matter physics
This paper highlights the limitations and applicability of results developed by Chao & Nahata (2015) for nonlinear pricing. Although Chao and Nahata appear to provide necessary and sufficient conditions for general utility functions, we show that one of their results leads only to a restatement of two constraints, and another result may not be valid when consumers can freely dispose of the good. Their model allows for the possibility that higher quantities will have a lower price than smaller quantities. We provide conditions under free disposal that preclude this anomaly. Our analysis suggests that further research on violations of the single-crossing condition should be encouraged.