ZONE PRICING

Our purpose is to study a spatial price policy often encountered in th e real world, known as zone pricing. This price policy consists in det ermining simultaneously several delivered prices together with the geo graphical zones in which they apply. It is shown that zone pricing app roximates perfect spatial price discrimination and that the firm's pro fit increases with the number of zones. Furthermore, the number of mar kets supplied by the firm rises with the number of zones. Finally, zon e pricing is compared to other standard spatial price policies and pos sible extensions are discussed.