Multiproduct Pricing Made Simple

Mark Armstrong and John Vickers

No 11692, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study multiproduct firms in the contexts of unregulated monopoly, regulated monopoly and Cournot oligopoly. Using the concept of consumer surplus as a function of quantities (rather than prices), we present simple formulas for optimal prices and show that Cournot equilibrium exists and corresponds to a Ramsey optimum. We then discuss a tractable class of preferences that involve a generalized form of homotheticity. Profit-maximizing quantities are proportional to efficient quantities. We discuss optimal monopoly regulation when the firm has private information about its cost vector, and find situations where optimal regulation leaves relative price decisions to the firm.

Keywords: Multiproduct pricing; Homothetic preferences; Cournot oligopoly; Monopoly regulation; Ramsey pricing; Cost passthrough; Multidimensional screening (search for similar items in EconPapers)
JEL-codes: D42 D43 D82 L12 L13 L51 (search for similar items in EconPapers)
Date: 2016-12
New Economics Papers: this item is included in nep-bec, nep-com, nep-ind, nep-mic, nep-mkt and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Multiproduct Pricing Made Simple (2018)
Working Paper: Multiproduct Pricing Made Simple (2016)
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