Third Degree Price Discrimination Theory And Welfare Effects

The studies on third-degree price discrimination by theory circle generally go on from two respects: 1.From manufacturer's point of views, they study how the manufacturer achieves the purpose that profits maximize through third-degree price discrimination. 2. From consumer's point of views, they study the impact on social welfare (consumer's surplus) of third-degree price discrimination. This paper research third-degree price discrimination in terms of manufacturer angle and consumer separately, and have drawn some valuable conclusions.In chapter 3, we chiefly study on the effectivity of third-degree price discrimination under two manufacturers, generally the studies on the effectivity of third-degree price discrimination in former papers were based on monopoly market, that is there is only one monopoly manufacturer in market. This paper expand the content of its research to the market conditions of two factories, based on a complete static information model and the linear demand functions and linear cost functions, the paper study the effectivity of third-degree price discrimination under two manufacturers, which compete in the same markets. It further respectively put forward the calculation formulas of the maximum sales volume and the maximum price and the maximum profit which belong to both manufacturers who is on the condition of common price or third-degree price discrimination in the two sub-markets, and also it put forward the necessary and sufficient conditions for third-degree price discrimination to be effective or to be same as common price.In chapter 4, based on more than two sub-markets conditions under economies of scale, the paper studies the relationship between the declining characteristic of Marginal cost and the change direction of the Price, it prove that if the price profit function under price discrimination is strictly quasiconcave and the n demand functions are downward sloping and independent ,a necessary condition for prices to either fall or rise in all sub-markets under price discrimination is that marginal cost be a declining function of total output. In addition,the paper also briefly analyzes the changes of social welfare by price discrimination actions.