Price Discrimination and Revealed Consumer Welfare

We take a revealed-preference approach to study the welfare effects of price discrimination. An analyst observes price and quantity data before and after a monopolist segments the market. The analyst knows neither the aggregate demand curve nor the information available to the monopolist. We characterize the set of observable price-quantity pairs that are rationalizable by some market segmentation. We then obtain sharp bounds on the change in consumer surplus arising from some segmentation. Finally, we provide conditions under which the data identifies an unambiguous increase (decrease) in consumer surplus.