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| we082616.pdf | -- 2009-01-28 -- Available on Internet -- preprint | 330,19 kB | Adobe PDF | |  |
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| Title: | Computing welfare losses from data under imperfect competition with heterogeneous goods |
| Author(s): | Corchón, Luis C. [lcorchon]
Zudenkova, Galina |
| Publisher: | Universidad Carlos III de Madrid. Departamento de Economía |
| Issued date: | May-2008 |
| URI: | http://hdl.handle.net/10016/2717 |
| Abstract: | We study the percentage of welfare losses (PWL) yielded by imperfect competition under product differentiation. When demand is linear, if prices, outputs, costs and the number of firms can be observed, PWL is arbitrary in both Cournot and Bertrand equilibria. If in addition, the elasticity of demand (resp. cross elasticity of demand) is known, we can calculate PWL in Cournot (resp. Bertrand) equilibrium. When demand is isoelastic and there are many firms, PWL can be computed from prices, outputs, costs and the number of .rms. In all these cases we find that price-marginal cost margins and demand elasticities may influence PWL in a counterintuitive way. We also provide conditions under which PWL increases or decreases with concentration. |
| Serie / Nº.: | UC3M Working papers. Economics;
2008-16 |
| Keywords: | Welfare losses
Product differentiation
Cournot equilibrium
Bertrand equilibrium |
| JEL Classification: | D61
L11
L13
L50 |
| Appears in Collections: | DE - Working Papers. Economics. WE
Economists Online
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