Complementary Goods: Prices and Consumer Welfare Under Duopoly and Monopoly

Oleksiy Andriychenko, Audrius Girnius and Atanu Saha

International Journal of the Economics of Business, 2006, vol. 13, issue 3, 373-386

Abstract: We examine prices, profits, and consumer surplus for differentiated complementary goods under duopoly and a multi-product monopoly. We find that little can be said about the relative magnitudes of prices of the components of a system of complementary goods under the alternative market structures. Although demand complementarity can lead to lower prices for either the primary or the secondary good under monopoly, both prices are not necessarily lower. The results unique to this paper are that, when two complementary goods form a system, the system price is unambiguously lower and consumer surplus and profits are higher under a multi-product monopoly.

Keywords: Complements; Multi-Product Monopoly (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (8)

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DOI: 10.1080/13571510600961353

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