Ramsey pricing: a simple example of a subordinate commodity

Paolo Bertoletti ()

Portuguese Economic Journal, 2024, vol. 23, issue 2, No 3, 247 pages

Abstract: Abstract We present preferences exhibiting a so-called subordinate good, namely a commodity such that the willingness to pay for it increases when the consumption of all goods increases proportionally, and thus receives a negative price-cost margin according to Ramsey pricing. We also show that its Bertrand equilibrium price is above its Cournotian price.

Keywords: Subordinate commodity; Negative price-cost margin; Ramsey pricing; Bertrand vs Cournot prices (search for similar items in EconPapers)
JEL-codes: D11 D43 D61 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s10258-023-00238-1

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