A Note on the Effects of Spatial Price Discrimination on Output, Welfare and Location

Chin Wei Yang, Hui Wen Cheng, Shih Shen Chen, Ching Wen Chi

Abstract


This paper reexamines the well-known results of Hwang and Mai (1990), which employed two linear demand functions of equal quantity intercept to examine total output, welfare and locations of a monopoly firm. By imposing equal slope value to both linear demand functions, this paper finds the output theorem by Robinson is preserved, while the welfare theorem by Schmalensee may or may not hold as welfare position hinges on plant locations in a linear market under the free on board (FOB) pricing.


Full Text: PDF DOI: 10.5539/ijef.v6n2p1

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International Journal of Economics and Finance  ISSN  1916-971X (Print) ISSN  1916-9728 (Online)

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