Robust lower bounds on monopoly profit with α-concave demand

Toan Le

Economics Letters, 2024, vol. 244, issue C

Abstract: I extend Condorelli’s lower bound on monopoly profit from log-concave demand to a broader class of α-concave demand, with α=0 corresponding to log-concavity and α=1 to concavity. The monopoly profit is at least 1(1+α)1/α of the area under the demand curve. I further derive upper bounds for consumer surplus and deadweight loss relative to monopoly profit and show all three bounds are sharp.

Keywords: Monopoly; α-concave demand (search for similar items in EconPapers)
JEL-codes: D42 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:244:y:2024:i:c:s0165176524005214

DOI: 10.1016/j.econlet.2024.112037

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