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Monopolistic Marginal Cost Pricing

Paolo Bertoletti

Economics Bulletin, 2016, vol. 36, issue 3, 1384-1387

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.

Keywords: Monopoly Pricing; Consumer Preferences. (search for similar items in EconPapers)
JEL-codes: D1 D4 (search for similar items in EconPapers)
Date: 2016-07-17
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