https://macropaperwarehouse.com/authors/dirk-bergemann/Dirk BergemannHugo -- gohugo.ioen-ushttps://macropaperwarehouse.com/papers/screening-and-segmenting-a-consumer-surplus-perspective/https://macropaperwarehouse.com/papers/screening-and-segmenting-a-consumer-surplus-perspective/<p>Bergemann, Heumann, and Wang study consumer surplus when a monopolist simultaneously engages in second-degree price discrimination (screening consumers within each market segment through quality-differentiated menus) and third-degree price discrimination (offering different menus across segments). The central question is which market segmentation maximizes aggregate consumer surplus, and under what conditions any segmentation benefits consumers at all.</p> <p>The model features a monopolist selling vertically differentiated goods of quality q at strictly convex cost c(q) to a continuum of buyers with privately known values v drawn from an aggregate market m*. A segmentation is any decomposition of m* into submarkets, each receiving a profit-maximizing screening menu. The seller observes segment identity but not individual values. The problem of finding the consumer-optimal segmentation is, on its face, an optimization over distributions of distributions — an infinite-dimensional object.</p>