Price Discrimination and Social Welfare

Standard texts of price discrimination see it as beneficial in a social welfare sense: consumer surplus is transferred to producer surplus, but the fact that quantity increases is good for social welfare (as it reduces the deadweight loss triangle). Interestingly, this isn’t the whole story. Tullock pointed out, a number of years ago, that social welfare loss can originate from the rent-seeking activities of those that are trying to capture these rents.

For instance, in a monopoly setting, standard economic theory would say that the cost of monopolies comes from the reduction in quantity sold (as a result of higher prices), leading to a loss of social welfare. [...]