By focusing on the two intercepts — the price and quantity intercepts — of inverse linear demands, this note shows that compared to uniform pricing, third-degree price discrimination can be neutral. When all price intercepts of sub-markets' inverse demands are the same, not only will all the...

We question the prevailing wisdom that a profit-maximizing monopolist using linear pricing cannot produce socially efficient output. We show that when market demand function exhibits a flat portion, the prevailing wisdom may not be true. Such a flat portion in demand is consistent with weakly...

This paper investigates the viability of Pay-What-You-Want (PWYW) pricing when firms compete without restrictions of a minimum payment requirement. We show that the equilibrium outcomes are different when underpayers, consumers paying less than marginal cost, are present as opposed to when they...

We consider second-degree price discrimination for two types of consumers. When the net-of-cost valuation functions cross at least once at some positive quantity, it is always optimal to serve both types of consumers. Moreover, the type with the higher valuation peak always gets the socially...

Using a game theoretic framework, we show that not only can pay-what-you-want pricing generate positive profits, but it can also be more profitable than charging a fixed price to all consumers. Further, whenever it is more profitable, it is also Pareto-improving. We derive conditions in terms of...

This paper examines the relationship between tying and vertical integration when an input monopolist can require its downstream buyer to purchase a competitively supplied input from it, or integrate forward in the downstream market. We show tying is an imperfect substitute for vertical...