The Comparative Advantages of Two Price Discrimination Schemes for Two Types of Consumers with Non-ordered Demands

Abstract

A monopolist can price-discriminate between two consumer groups with linear de mands that can cross (violate the Spence-Mirrlees condition). We derive complete parametric taxon omy of the outcomes. Switching from simple uniform pricing to two-part tariff or package pricing «generally» decreases the monopolistic deadweight loss. Switching from two-part tariff to packages also «generally» decreases the loss. However, we specify a small parameters' region where both these conclusions fail. Additionally, we find parameters yielding discrimination bene fits to «big» or to «small» consumers. Thereby, we show the demand-specific and pricing- scheme specific reasons for/against public restrictions on price discrimination.