THE WELFARE ASPECTS OF SPATIAL PRICING POLICIES RECONSIDERED FOR A MONOPOLY CASE*

ABSTRACT. We reexamine the price structures and their welfare implications in three pricing regimes (mill, uniform and discriminatory) for a monopoly. We show that spatial price discrimination could provide the highest social welfare and, when consumers tastes are heterogeneous enough, also the highest consumer surplus. The superiority of spatial price discrimination is partially due to the larger output produced and partially due to differential treatment for consumers with heterogeneous tastes.