also, further explanation of the nordhaustt 2% value capture would be fascinating...have read that stat multiple times, but never seen great explanation. Although is has massive implications, any place that you or others explore that would be fascinating!
The consumers can be better off or worse off. That’s true. But consider the case where there is a fixed cost and the good won’t be produced without price discrimination. Then clearly the consumers are better off under price discrimination since their surplus goes from zero to the two green rectangles.
this is a critical distinction. If price discrimination is needed to make the item /serve profitable at all, then you are correct consumer benefits. but in MANY cases where the product will be made anyway, price discrimination and manipulative market power / concentration shafts the consumer. maybe not a 101 model, but any models that accurately bifurcate this situation?
Great Post!
Thanks :)
also, further explanation of the nordhaustt 2% value capture would be fascinating...have read that stat multiple times, but never seen great explanation. Although is has massive implications, any place that you or others explore that would be fascinating!
Hm... why are consumers better off? It seems like they would be worse off. It's simply that their surplus gets turned into profit...
The consumers can be better off or worse off. That’s true. But consider the case where there is a fixed cost and the good won’t be produced without price discrimination. Then clearly the consumers are better off under price discrimination since their surplus goes from zero to the two green rectangles.
this is a critical distinction. If price discrimination is needed to make the item /serve profitable at all, then you are correct consumer benefits. but in MANY cases where the product will be made anyway, price discrimination and manipulative market power / concentration shafts the consumer. maybe not a 101 model, but any models that accurately bifurcate this situation?
Okay, I'm late here, but surely it's only the consumers with high WTP that are shafted -- the rest are better off?