A Model of Shareholder Discounts

Posted: 8 Dec 2000

See all articles by Xiangkang Yin

Xiangkang Yin

Deakin University; Financial Research Network (FIRN)

Abstract

Many companies supplying consumption goods and services provide their shareholders with price discounts. This paper presents a simple model describing shareholder discounts and consequent market equilibrium. It is found that shareholder discounts resemble many features of two part tariffs. The welfare analysis shows that the equilibrium outcomes with shareholder discounts are Pareto inefficient. Compared with uniform pricing, shareholder discounts unambiguously increase major shareholders' wealth but their effects on consumers and society are generally ambiguous.

JEL Classification: D42, L12

Suggested Citation

Yin, Xiangkang, A Model of Shareholder Discounts. Available at SSRN: https://ssrn.com/abstract=249076

Xiangkang Yin (Contact Author)

Deakin University ( email )

Melbourne, Victoria
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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