The ability of a monopoly seller to prevent resale is often presented as a necessary condition for first degree price discrimination. In this paper, we explore this claim and show that, even with costless arbitrage markets, price discrimination may continue to be both feasible and profit maximizing despite potential resale. With finite numbers of consumers, arbitrage markets may be ‘thin’, in t...

Standard discussions of perfect price discrimination rest on a hidden assumption: that the monopolist can make take-it-or-leave-it offers. If a monopoly charges different prices to each of a large number of buyers, the correct paradigm is not the ultimatum game, but bilateral monopoly. The monopolist’s profit will not be the entire surplus, but something less. Under “balanced isoperfect price d...

We explain strategic piracy in the software industry as a result of the presence of learning costs in the context of intertemporal price discrimination. First, piracy can be a means to incite consumers to invest in human capital, which increases their propensity to pay and enables the firm to raise prices. Second, the presence of piracy induces a more efficient intertemporal price discrimination.

Advance selling before the time of consumption is now possible for even very small service providers, given new technologies (specifically, web-based transactions, biometrics and smart card technology). Moreover, recent research has revealed that advance selling can substantially improve profits without traditional price discrimination. However, that research was limited to monopoly settings. T...

The new document " Approach on appropriate remedies in the new regulatory framework " (2004) jointly published by ERG and EU, identifies, among several competition problems related to the market of mobile telephony, the strategy of price discrimination between on net and off net calls. Through such strategy the incumbents could get a competitive advantage because the price discrimination can re...

Financing through crowdfunding is growing rapidly, especially for start-ups. Investment financing via crowdfunding is integrated with the real side of the firm as future consumers may potentially provide all or part of the required resources. We derive the optimal pre-sale crowdfunding contract of a financially constrained monopolist and analyze its implications for production, investment and w...

Dynamic price discrimination adjusts prices based on the option value of future sales, which varies with time and units available. This paper surveys the theoretical literature on dynamic price discrimination, and confronts the theories with new data from airline pricing behavior. Correspondence to: R. Preston McAfee, 100 Baxter Hall, California Institute of Technology, Pasadena, CA 91125, pres...