This paper studies the welfare effects of wholesale price discrimination between downstream
firms operating under different regulatory systems. I model a monopolistic intermediate
good market in which production cost differences between downstream firms may
be due to regulatory or technological asymmetries. Price discrimination reduces regulatory
distortions but may lower productive efficiency. Therefore, price discrimination increases
welfare if regulation is the dominant source of cost differences. This provides a novel welfare
rationale for exempting wholesale markets from the recent ban on geo-blocking in the EU
