Abstract
This paper considers the impact of location on the output effect of third-degree price discrimination. It shows that the price discrimination may increase, decrease or leave total output of the labor-managed firm unchanged even if the demand curves in two separate markets are linear. This result is significantly different from the conventional non-spatial result. It indicates that the location decision of the labor-managed firm has an important influence on the output effect of third-degree price discrimination.
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Received: April 2002/Accepted: February 2004
I am grateful to Professor Tschangho John Kim and an anonymous referee for valuable comments and suggestions that have substantially improved the paper. All remaining errors are my own