It is usually argued that the monopolistic pricing distortion arises because "a monopoly can raise its price above marginal cost without losing all its clients" (Tirole, 1988). We discuss a simple well-behaved example in which: i) monopoly price gets as close as desired to marginal cost, and ii) nevertheless it is associated to a significant dead-weight welfare loss.

Monopolistic Marginal Cost Pricing

BERTOLETTI, PAOLO
2016-01-01

Abstract

It is usually argued that the monopolistic pricing distortion arises because "a monopoly can raise its price above marginal cost without losing all its clients" (Tirole, 1988). We discuss a simple well-behaved example in which: i) monopoly price gets as close as desired to marginal cost, and ii) nevertheless it is associated to a significant dead-weight welfare loss.
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11571/1123282
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