Delivered pricing by a spatial monopoly amounts to third degree price discrimination. Well known results in spatial economics show that the monopolist location choice is efficient under delivered pricing and generally inefficient under mill pricing. By contrast, the present paper shows that if the monopolist sells a durable good the location is inefficient also under delivered pricing . Under mill pricing the same inefficiency occurs
Price discrimination and the location choice of a durable goods monopoly / P.G. Garella. - In: REGIONAL SCIENCE AND URBAN ECONOMICS. - ISSN 0166-0462. - 32:6(2002), pp. 765-773.
Price discrimination and the location choice of a durable goods monopoly
P.G. GarellaPrimo
2002
Abstract
Delivered pricing by a spatial monopoly amounts to third degree price discrimination. Well known results in spatial economics show that the monopolist location choice is efficient under delivered pricing and generally inefficient under mill pricing. By contrast, the present paper shows that if the monopolist sells a durable good the location is inefficient also under delivered pricing . Under mill pricing the same inefficiency occurs
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