Market Interdependence and Third-Degree Price Discrimination: Comment

Cebula, Richard (1979): Market Interdependence and Third-Degree Price Discrimination: Comment. Published in: The Quaterly Review of Economics and Business , Vol. 20, No. 2 (31 August 1980): pp. 106-109.

Abstract

The purpose of this theoretical note is to develop a model of third-degree price discrimination in which the quantities sold in each market are interdependent. We demonstrate in our mathematical model that in this situation the price differential may be explained not only in terms of price elasticity differentials, as is typically shown to be the case, but also in terms of the market interdependency, which is generally overlooked.

• Item Type: MPRA Paper
• Language: English
• Keywords: third-degree price discrimination; market interdependence; price differentials
• Subjects: D - Microeconomics > D1 - Household Behavior and Family Economics > D11 - Consumer Economics: Theory; D - Microeconomics > D4 - Market Structure, Pricing, and Design > D42 - Monopoly; D - Microeconomics > D4 - Market Structure, Pricing, and Design > D49 - Other; D - Microeconomics > D9 - Intertemporal Choice > D99 - Other

References

Fritz Machlup, Business Concentration and Price Policy (Princeton: Princeton University Press, 1955).

A.C. Pigou, The Economics of Welfare (London: Macmillan, 1932).

Joan Robinson, The Economics of Imperfect Competition (London, Macmillan, 1933).

Heinrich von Stackleberg, "Price Discrimination in an Arbitrarily Divided Market,” International Economic Papers, Vol. 8 (Spring, 1958), 65-73.

Bruce Yandle, Jr. “Monopoly-Induced Third-degree Price Discrimination,” Quarterly Review of Economics and Business, Vol. 11 (Spring 1971), 71-75.