Price Discrimination

This PDF is a selection from an out-of-print volume from the National Bureau of Economic Research

Volume Title: Business Concentration and Price Policy Volume Author/Editor: Universities-National Bureau Volume Publisher: Princeton University Press Volume ISBN: 0-87014-196-1 Volume URL: http://www.nber.org/books/univ55-1 Publication Date: 1955

Chapter Title: Characteristics and Types of Price Discrimination Chapter Author: Fritz Machlup Chapter URL: http://www.nber.org/chapters/c0971 Chapter pages in book: (p. 395 - 438)

CHARACTERISTICS AND TYPES OF PRICE DISCRIMINATION

FRITZ MACHLUP

THE JOHNS HOPKINS UNIVERSITY

THE literature on price discrimination is widely scattered over the different fields of economics, and the references to problems of discrimination made by various specialists have long remained uncoordinated. We find these references in discussions of rate-making problems in Transportation and Public Utilities; antitrust problems in Industrial Organization; problems of unfair competition in Marketing; dumping in International Trade; basing-point and deliveredprice problems in Government Control of Business; problems of output determination in Pure Economic Theory. An attempt will be

made here to draw some of these separate studies together in a

more comprehensive picture.

1. The Essential Characteristics of Price Discrimination To BEGIN with definitions and conceptual arguments is sometimes inexpedient, and usually uninspiring. Our present task, however, will be clearer if we do not defer an attempt to define our subject.

THE DEFINITION

PRICE discrimination is sometimes defined as the practice of a firm

selling a homogeneous commodity at the same time to different purchasers at different prices. Almost every word of this definition

needs to be qualified.

i. "Selling to different purchasers": We ought to add "buying

from different sources of supply" (because there is price discrimination in buying as well as in selling) and...