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ABSTRACT
This research focuses on price discrimination policy in a duopoly market structure of firms purchasing energy from a monopolist supplier. The results indicate that the price discrimination of energy reduces social welfare and harms efficient firms, helping explain bans on price discrimination. Firms with lower efficiency benefit from price discrimination, while firms with higher efficiency suffer. Although the profits of efficient producers are reduced under price discrimination, the monopolist energy supplier is prone to price discrimination. The results from this research indicate that price discrimination for energy input is irrational.
Acknowledgment
Sincere thanks to the editor and the anonymous reviewer for their beneficial suggestions.
Funding
This work is partially supported by the Foundation for High-level Talents in Higher Education of Guangdong, GDUPS (2012) and National Natural Science Foundation of PRC (71271100, 71401057), the Guangdong Social Science Foundation (GD13YLJ02), the Soft Science Project of Guangdong Province (2014A070704008), Collaborative Innovation Center of Scientific Finance & industry (16XT04), and the Innovative Group Foundation (Humanities and Social Sciences) for Higher Education of Guangdong Province (2015WCXTD009).