On Input Markets Surplus and its Relation to the Downstream Market Game

19 Pages Posted: 8 Feb 2007

See all articles by Leonardo J. Basso

Leonardo J. Basso

Universidad de Chile - Civil Engineering Department

Date Written: May 2006

Abstract

To analyze welfare effects of input markets changes, economists studied the relationship between the surplus measured in the input markets and the surplus in the output markets. The latest results hinge on simplifying assumptions, which are relaxed here by linking the input markets surplus question to another stream of literature, which characterizes functions that oligopolists collectively, yet unintentionally, maximize. It is shown that the area under the input demands is equal to the change in a function for which critical points coincide with the equilibria of the downstream game. A particular case of these functions is the exact potential function.

Keywords: Input markets surplus, vertical structure, potential games

JEL Classification: D61, D43, L13

Suggested Citation

Basso, Leonardo J., On Input Markets Surplus and its Relation to the Downstream Market Game (May 2006). Available at SSRN: https://ssrn.com/abstract=961471 or http://dx.doi.org/10.2139/ssrn.961471

Leonardo J. Basso (Contact Author)

Universidad de Chile - Civil Engineering Department ( email )

Casilla 228-3
Santiago
Chile
56 2 978 4380 (Phone)
56 2 689 4206 (Fax)

HOME PAGE: http://tamarugo.cec.uchile.cl/~dicidet/leo.html

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