Download this Paper Open PDF in Browser

Markup Uniformity Under the Multi-Nomial Logit

3 Pages Posted: 10 Apr 2011  

Nicolas de Roos

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

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

Nicolas De Roos (Contact Author)

University of Sydney ( email )

University of Sydney
Sydney NSW 2006, NC
Australia

Paper statistics

Downloads
28
Abstract Views
248