Price discrimination and investment incentives

Alexei Alexandrov, Joyee Deb

    Research output: Contribution to journalArticlepeer-review


    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 languageEnglish (US)
    Pages (from-to)615-623
    Number of pages9
    JournalInternational Journal of Industrial Organization
    Issue number6
    StatePublished - Nov 2012


    • 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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