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You are using the term 'value' in a loaded sense. If you use the proper term "consumer surplus," your argument becomes very different. "Who should capture that
by greenleafjacob 12y ago
You are using the term 'value' in a loaded sense. If you use the proper term "consumer surplus," your argument becomes very different. "Who should capture that consumer surplus? Sellers? Buyers? Shared somehow? How?"
In my own mind, it's kind of irrelevant who gets it, because I don't recognize that buyer B has a right to pay only $10 or $13 or any other amount. I think it follows that if you allow sellers to discriminate among any classes of buyers, then there is no way to draw the line at how permissibly narrow those classes can be drawn.
- thaumasiotes 12y ago> You are using the term 'value' in a loaded sense. If you use the proper term "consumer surplus," And you think he's making loaded arguments? The value he's talking about is simply the sum of consumer surplus and producer surplus. They're both legitimate; a sale price of $10 allots $9 in gains from trade (or "value") entirely to consumer surplus, and perfect discriminatory pricing allots the same $9 of value to producer surplus, but the value is still produced despite the consumer surplus being $0. Compare the $14-uniform-price scenario, where the consumer surplus is $2, the producer surplus is $4, and the gains from trade are $6 when they could be $9. That's $3 of lost value, and I don't see why you think that's a biased or controversial way of putting it.
- ddlatham 12y agoSorry if I've used the wrong term. I'm picking them from intuition, but I haven't studied the field. If the proper term is surplus, just use that instead. The question of how to divide that surplus is very interesting and especially relevant to judgement of price discrimination.