Markup Uniformity Under the Multi-Nomial Logit

de Roos, Nicolas

doi:10.2139/ssrn.1804735

Download This Paper

Open PDF in Browser

Add Paper to My Library

Markup Uniformity Under the Multi-Nomial Logit

3 Pages Posted: 10 Apr 2011

See all articles by Nicolas de Roos

Nicolas de Roos

University of Liverpool; University of Sydney

Date Written: April 7, 2011

Abstract

We show that the multi-nomial logit model of demand implies a constant markup of price above marginal cost for multi-product oligopolists. Further, for the random coefficients discrete choice model of demand, a multi-product oligopolist optimally sets the same markup for two products if they share the same form of consumer heterogeneity, even if product characteristics differ markedly.

Keywords: Multi-nomial logit, price uniformity, oligopoly

JEL Classification: L13

Suggested Citation: Suggested Citation

de Roos, Nicolas, Markup Uniformity Under the Multi-Nomial Logit (April 7, 2011). Available at SSRN: https://ssrn.com/abstract=1804735 or http://dx.doi.org/10.2139/ssrn.1804735