Dr. Jun Zhang, Associate Professor

Department of Economics, School of Business, University of Technology Sydney, Sydney, Australia

Biography

Dr. Jun Zhang is an Associate Professor at University of Technology Sydney (UTS) and Australian Research Council Research Fellow (DECRA, equivalent to Excellent Young Scientists Fund in China). He received his PhD in Economics from Queen’s University, Canada. His research interests are in economic theory, industrial organization and operation management. His publications appear in Journal of Economic Theory, Economic Journal, Management Science, Games and Economic Behavior, European Journal of Operational Research, International Journal of Production Economics, etc.

Topic

Welfare of Competitive Price Discrimination with Captive Consumers

Abstract

We study the welfare effects of price discrimination in a duopoly market with both captive and contested consumers. Using a unified information design approach, we characterize the best and worst market segmentations for producer surplus, consumer surplus, and social surplus. The firm-optimal segmentation, which divides the market into two nested segments, consistently harms consumers compared to uniform pricing. The consumer-optimal segmentation, which divides the market into a symmetric segment and a nested segment, sometimes leads to a Pareto improvement. Social surplus, if monotone in firm profit, is often maximized either by the firm-optimal or consumer-optimal segmentation.