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Non-Uniform Pricing, Output and Welfare under Monopoly

Michael L. Katz
The Review of Economic Studies
Vol. 50, No. 1 (Jan., 1983), pp. 37-56
Published by: Oxford University Press
Stable URL: http://www.jstor.org/stable/2296953
Page Count: 20
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Non-Uniform Pricing, Output and Welfare under Monopoly
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Abstract

A monopolist may earn greater profits by setting a nonuniform price schedule (one in which the price varies with the quantity purchased) than by charging a uniform price. In general, the profit maximizing non-uniform price schedule and the welfare maximizing schedule do not coincide. Thus, there may be scope for improving market performance through regulation. The paper considers a regulator who has limited information and authority. The issues addressed centre around the question of whether the level of total market output can be taken as a measure of market performance. Conditions under which welfare is a monotonic function of the level of total output are derived.

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