Suchergebnisse

Abstract.  We introduce a flexible third‐degree price discrimination framework by modeling the information firms possess about consumers' locations (preferences) on the Salop circle as a partition. Higher information quality is translated into a partition refinement. In the limit, we obtain the perfect price discrimination paradigm. We show that the free‐entry equilibrium number of firms exhibits a U‐shape as a function of the quality of information. This implies that imperfect price discrimination generates the most efficient free‐entry outcome. JEL classification: D43, L11, L43