This book provides an updated overview of the recent progress in the theoretical study of
third-degree price discrimination. It is a marketing tactic and is said to be present if the
unit price is different across different groups of buyers. Its welfare evaluation is often
difficult because it entails two countervailing effects: on one hand it exploits surplus from
consumers who have high willingness-to-pay but on the other hand it generates gains from
trade from consumers who otherwise would not purchase the good. Recognizing this difficulty we
provide new insights on evaluation of third-degree price discrimination in consideration of
network effects and vertical product differentiation. Our analysis is particularly useful for
the industries related to information and communication technologies (ICT) because these two
elements characterize them. Furthermore we also study the welfare effects of third-degree
price discrimination under imperfect competition other than monopoly. At first it seems that
it may complicate the analysis under monopoly. However we argue that the main thrusts of
analysis under monopoly carry over to the case of oligopoly. We also take into account
behavioral aspects and their implications for studying third-degree price discrimination.
Overall this book is designed to provide implications for contemporary management and policy
issues by advancing theoretical issues in industrial organization.
