The limits of price discrimination

Dirk Bergemann, Benjamin Brooks, Stephen Morris

Research output: Contribution to journalArticlepeer-review

127 Scopus citations


We analyze the welfare consequences of a monopolist having additional information about consumers' tastes, beyond the prior distribution; the additional information can be used to charge different prices to different segments of the market, i.e., carry out "third degree price discrimination." We show that the segmentation and pricing induced by the additional information can achieve every combination of consumer and producer surplus such that: (?) consumer surplus is nonnegative, (ii) producer surplus is at least as high as profits under the uniform monopoly price, and (iii) total surplus does not exceed the surplus generated by efficient trade.

Original languageEnglish (US)
Pages (from-to)921-957
Number of pages37
JournalAmerican Economic Review
Issue number3
StatePublished - Mar 1 2015

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics


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