Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/62473
Title: Third-degree price discrimination in the presence of congestion externality
Authors: Czerny, AI 
Zhang, A
Issue Date: 2015
Publisher: Wiley-Blackwell
Source: Canadian journal of economics, 2015, v. 48, no. 4, p. 1430-1455 How to cite?
Journal: Canadian journal of economics 
Abstract: This paper analyzes third-degree price discrimination of a monopoly airline in the presence of congestion externality when all markets are served. The model features the business-passenger and leisure-passenger markets where business passengers exhibit a higher time valuation, and a less price-elastic demand, than leisure passengers. Our main result is the identification of the time-valuation effect of price discrimination, which can work in the opposite direction as the well-known output effect on welfare. This time-valuation effect clearly explains why discriminating prices can improve welfare even when this is associated with a reduction in aggregate output.
URI: http://hdl.handle.net/10397/62473
ISSN: 0008-4085
EISSN: 1540-5982
DOI: 10.1111/caje.12155
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