Consumer Heterogeneity and Inefficiency in Oligopoly Markets

29 Pages Posted: 3 Dec 2020 Last revised: 21 Apr 2021

See all articles by Guofu Tan

Guofu Tan

University of Southern California - Department of Economics

Junjie Zhou

Tsinghua University - Tsinghua University School of Economics and Management

Date Written: November 24, 2020

Abstract

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

Tan, Guofu and Zhou, Junjie, Consumer Heterogeneity and Inefficiency in Oligopoly Markets (November 24, 2020). Available at SSRN: https://ssrn.com/abstract=3736442 or http://dx.doi.org/10.2139/ssrn.3736442

Guofu Tan

University of Southern California - Department of Economics ( email )

3620 South Vermont Ave. Kaprielian (KAP) Hall, 300
Los Angeles, CA 90089
United States
213-740-3520 (Phone)

Junjie Zhou (Contact Author)

Tsinghua University - Tsinghua University School of Economics and Management ( email )

Beijing
China

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