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- Title
INCOME DISPERSION AND PRICE DISCRIMINATION.
- Authors
Yong He; Guang-Zhen Sun
- Abstract
This paper analyses the effects of inter-market and intra-market income heterogeneities on output and social welfare under uniform pricing and differential pricing regimes by considering a finite number of markets. We first derive the linear demand curve in each market under plausible conditions, and then show that more markets (and consumers) are excluded under uniform pricing the higher are the inter-market income differences. We also show that adding markets, even of lower income levels than those of existing markets, helps to decrease prices and thus cause more markets to be served. Implications of intra-market income dispersion are also explored.
- Subjects
INCOME inequality; PUBLIC welfare; PRICING; DISTRIBUTION (Economic theory); WEALTH
- Publication
Pacific Economic Review, 2006, Vol 11, Issue 1, p59
- ISSN
1361-374X
- Publication type
Article
- DOI
10.1111/j.1468-0106.2006.00299.x