Ramsey Pricing: A Simple Example of a Subordinate Commodity
6 Pages Posted: 13 Jan 2021
Date Written: January 13, 2021
We present preferences exhibiting a so-called subordinate good, namely a commodity that receives a negative price-cost margin according to Ramsey pricing. We also show that they deliver Ramsey quantities proportional to the efficient ones.
Keywords: D11; D43; D61
JEL Classification: Subordinate Commodity; Negative Price-Cost Margin; Ram- sey Pricing
Suggested Citation: Suggested Citation