Bell Journal of Economics

While some firms, such as airlines, may have both the informational and legal capabilities for identifying and segmenting customers into different markets, most firms do not. When only the distribution of characteristics of consumers is known, we characterize the situation as one of imperfect discrimination. Individuals in such markets cannot be identified; thus, all must face the same price structure. Some discrimination is nonetheless possible through the use of nonuniform pricing policies. For optimal nonuniform pricing schedules, we have focused attention on two: profit maximization and welfare maximization, and consider two common forms of nonuniform pricing: two-part and two-block policies. We show that, regardless of the firm's objective, it can always do at least as well with a two-block as with a two-part policy (and at least as well with a two-part policy as with uniform pricing). The two-part and block pricing schemes strictly dominate the uniform scheme for a profit maximizer, and increased profit is not always at the expense of welfare. Under uncertainty we observe it is also possible to obtain an ordering over the uniform, two-part and block pricing strategies on risk-efficiency grounds. Without assuming any specific probability distributions or assuming any specific way in which the random component affects demand, we demonstrate that an expected utility of profit maximizer will find a block pricing policy at least as preferred as a two-part pricing policy, which in turn is strictly preferred to a uniform policy. Our results indicate that optimal regulation of utilities should not rule out block rate structures a priori. Declining block prices are not necessarily antithetical to welfare maximization in a profit-constrained environment. [Авторский текст]