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Full-Text Articles in Social and Behavioral Sciences
On The Alignment Of Consumer Surplus And Total Surplus Under Competitive Price Discrimination, Dirk Bergemann, Benjamin Brooks, Stephen Morris
On The Alignment Of Consumer Surplus And Total Surplus Under Competitive Price Discrimination, Dirk Bergemann, Benjamin Brooks, Stephen Morris
Cowles Foundation Discussion Papers
A number of producers of heterogeneous goods with heterogeneous costs compete in prices. When producers know their own production costs and consumers know their values, consumer surplus and total surplus are aligned: the information structure and equilibrium that maximize consumer surplus also maximize total surplus. We report when alignment extends to the case where either consumers are uncertain about their own values or producers are uncertain about their own costs, and we also give examples showing when it does not. Less information for either producers or consumers may intensify competition in a way that benefits consumers but results in inefficient …
Mixed Bundling In Oligopoly Markets, Jidong Zhou
Mixed Bundling In Oligopoly Markets, Jidong Zhou
Cowles Foundation Discussion Papers
This paper proposes a framework for studying competitive mixed bundling with an arbitrary number of firms. We examine both a firm’s incentive to introduce mixed bundling and equilibrium tariffs when all firms adopt the mixed-bundling strategy. In the duopoly case, relative to separate sales, mixed bundling has ambiguous impacts on prices, profit and consumer surplus; with many firms, however, mixed bundling typically lowers all prices, harms firms and benefits consumers.
Repeated Trade And The Velocity Of Money, Pradeep Dubey, Siddhartha Sahi, Martin Shubik
Repeated Trade And The Velocity Of Money, Pradeep Dubey, Siddhartha Sahi, Martin Shubik
Cowles Foundation Discussion Papers
There are two sources of inefficiency of strategic equilibria (SE) in market mechanisms. The first is the oligopolistic effect, which occurs when an agent can single-handedly influence prices. With a continuum of agents we get “perfect competition” and this effect is, of course, wiped out. But the inefficiency of SE’s may nevertheless persist because agents are not “perfectly liquid,” i.e., the constraints of the mechanism are such that they cannot carry out arbitrary trades at the market prices. Our main result is that, if enough repeated rounds of trade are permitted within a single utility period, then the liquidity problem …