Prices and Deadweight Loss in Multi-Product Monopoly

Posted: 24 Jun 2009 Last revised: 2 Oct 2009

See all articles by Jim Y. Jin

Jim Y. Jin

University of St. Andrews - School of Management

Gerald Pech

affiliation not provided to SSRN

Rabah Amir

University of Arizona - Department of Economics; University of Arizona

Michael Troege

ESCP-Europe

Date Written: June 23, 2009

Abstract

The paper investigates prices and the deadweight loss in multi-product monopoly (MPM) with linear demand and constant marginal costs. We examine MPM with three commonly used demand structures: standard heterogeneous products, vertically (quality) and horizontally (spatially) differentiated products. Contrary to existing results we find that in all three cases a product's price depends only on specific characteristics of that product, independent of product interactions, the characteristics of other goods and even the number of other goods. We also show that in all three models the deadweight loss due to monopoly pricing is equal to half the total monopoly profit.

Keywords: Multi-Product Monopoly

JEL Classification: D42

Suggested Citation

Jin, Jim Y. and Pech, Gerald and Amir, Rabah and Troege, Michael, Prices and Deadweight Loss in Multi-Product Monopoly (June 23, 2009). Available at SSRN: https://ssrn.com/abstract=1424588

Jim Y. Jin

University of St. Andrews - School of Management ( email )

The Gateway
Gateway
St. Andrews, Fife KY16 9SS
United Kingdom

Gerald Pech

affiliation not provided to SSRN ( email )

Rabah Amir

University of Arizona - Department of Economics ( email )

Tucson, AZ 85721
United States

University of Arizona ( email )

Department of History
Tucson, AZ 85721
United States

Michael Troege (Contact Author)

ESCP-Europe ( email )

79, Avenue de Republique
75543 Paris, Cedex 11, 75011
France
33/149232601 (Phone)

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