ABSTRACT
Interestingly, the above discussion casts some doubt on the general claim that discriminatory pricing should always lead to a larger "deadweight loss" than mill pricing. Indeed, the additional cost generated by the excess capacity required to attract customers, could well exceed the welfare gains related to mill pricing. 15
A few general conclusions emerge from the above analysis. First, the spatial price policy exerts an influence on the monopolist's locational decision. Results obtained under (uniform) delivered pricing and mill pricing are very different. 16 With delivered prices, one expects the location to be a market or a node of the network. In contrast, with mill prices, some "intermediate" locations are possible. Second, the choice of a particular price policy affects the efficiency of the monopolist's production-location pattern. Given the quantities sold to the customers at s\ ... ,sm, total transportation and production costs are minimized under delivered pricing, but not under mill pricing.
