Felder, Stefan:
Third-Degree Price / Discrimination in the Presence of Subsidies
2006
In: German Economic Review, Heft 7, S. 419 - 426
Artikel/Aufsatz in Zeitschrift2006Wirtschaftswissenschaften
Titel:
Third-Degree Price / Discrimination in the Presence of Subsidies
Autor(in):
Felder, StefanLSF
Erscheinungsjahr
2006

Abstract:

According to a classical result, a move from uniform pricing to third-degree price discrimination only improves welfare if total output increases. In this paper I show that the classical result fails in the presence of subsidies. This finding appears to be relevant for the pharmaceutical sector where a consumer pays a fraction of the actual drug price due to health insurance coverage.