Price discrimination and investment incentives

Alexei Alexandrov; Joyee Deb

doi:10.1016/j.ijindorg.2012.07.001

Price discrimination and investment incentives

Alexei Alexandrov, Joyee Deb

Research output: Contribution to journal › Article › peer-review

Abstract

We examine a model of a monopolist selling to two segments of consumers with different preferences for quality. We show that if the firm is unable to price discriminate between the segments, then there is less investment in quality. We find that both consumer segments, and society overall, may suffer if the firm is unable to price discriminate. We extend the model to duopoly competition, and find that our results still hold.

Original language	English (US)
Pages (from-to)	615-623
Number of pages	9
Journal	International Journal of Industrial Organization
Volume	30
Issue number	6
DOIs	https://doi.org/10.1016/j.ijindorg.2012.07.001
State	Published - Nov 2012

Keywords

investment
net neutrality
parallel trade
pharmaceuticals
price discrimination

ASJC Scopus subject areas

Industrial relations
Aerospace Engineering
Economics and Econometrics
Economics, Econometrics and Finance (miscellaneous)
Strategy and Management
Industrial and Manufacturing Engineering

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10.1016/j.ijindorg.2012.07.001

Cite this

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title = "Price discrimination and investment incentives",

abstract = "We examine a model of a monopolist selling to two segments of consumers with different preferences for quality. We show that if the firm is unable to price discriminate between the segments, then there is less investment in quality. We find that both consumer segments, and society overall, may suffer if the firm is unable to price discriminate. We extend the model to duopoly competition, and find that our results still hold.",

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AU - Deb, Joyee

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AB - We examine a model of a monopolist selling to two segments of consumers with different preferences for quality. We show that if the firm is unable to price discriminate between the segments, then there is less investment in quality. We find that both consumer segments, and society overall, may suffer if the firm is unable to price discriminate. We extend the model to duopoly competition, and find that our results still hold.

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KW - parallel trade

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KW - price discrimination

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Price discrimination and investment incentives

Abstract

Keywords

ASJC Scopus subject areas

Access to Document

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