What type of study is this?

This is a Quantitative Study study.

October 13, 2025

Price Discrimination by a Mixed‐Objective Firm

Key Points

Increasing the focus on consumer surplus allows a firm to capture more rent from high-quality good consumers, improving overall outcomes.
Even as the price-quantity offered to low-quality consumers changes, their surplus remains unaffected by the firm's shifts in focus.
The firm's mixed-objective strategy fosters a more inclusive market by catering to both high- and low-quality product demanders.
This approach indicates a potential welfare enhancement, promoting sales to diverse consumer segments rather than favoring high-quality demanders alone.

Abstract

ABSTRACT We examine a firm maximizing a combination of profit and consumer surplus that engages in price discrimination between two groups under incomplete information about their willingness to pay. As the firm increases the weight placed on the consumer surplus of those demanding high‐quality goods, the rent captured by this group increases. While this shift alters the price‐quality bundle offered to consumers demanding low quality, it never increases their surplus. Importantly, the mixed objective function can enhance overall welfare, as the firm is more likely to serve both consumer groups rather than restrict sales to only the demanders of high quality.

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Cite This Study

Bose et al. (Wed,) studied this question.

synapsesocial.com/papers/68ed3352c8c3d6f5ff5ddb3f https://doi.org/https://doi.org/10.1111/jpet.70068

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