Consumer Heterogeneity and Inefficiency in Oligopoly Markets
29 Pages Posted: 3 Dec 2020 Last revised: 21 Apr 2021
Date Written: November 24, 2020
Motivated by several recent papers on oligopoly theory, we characterize geometric properties of a class of inequalities involving the product of two integrals of the probability density quantile function and its reciprocal. Through three applications, we illustrate how our characterization can help enrich our understanding of the existing findings and shed some new insight, regarding the extent to which market inefficiency depends on the properties of the distributions of consumer heterogeneity.
Keywords: Probability density quantile, discrete choice models, consumer heterogeneity, log-concavity, free entry, efficiency, competitive bundling, multi-sided markets
JEL Classification: L13, L4
Suggested Citation: Suggested Citation