American Economic Review· 2026Q1
Screening and Segmenting: A Consumer Surplus Perspective
- 1citations
- Q1SCImago
- 2026year
Short summary
A monopolist simultaneously adjusting prices and qualities across segments leads to a consumer-optimal segmentation where consumers with identical values receive identical qualities, though prices may vary.
AI-generated from the title and abstract; the full text is not read.
Key points
- Monopolist simultaneously adjusts prices and product qualities across segments.
- Consumer-optimal segmentation assigns identical quality to consumers with identical values.
- Segmentation harms consumers if demand elasticity exceeds supply elasticity.
- Consumer benefits from segmentation depend on demand and supply elasticities.
AI-generated from the title and abstract; the full text is not read.
Abstract
We analyze consumer surplus when a monopolist can adjust both prices and product qualities across segments, engaging in secondand third-degree price discrimination simultaneously. We characterize the consumer-optimal segmentation and show that it has a striking structure: Consumers with the same value receive the same quality in every segment, though prices differ. Under mild conditions, any segmentation harms consumers if and only if demand is sufficiently more elastic than supply. Hence, potential benefits for consumers depend critically on demand and supply elasticities. These findings have implications for regulatory policy regarding price discrimination and market segmentation. (JEL D42, D83, K21, L12, L15)
The authors' abstract, as published at the source. American Economic Review, 2026 · DOI ↗
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