Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

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Friday, April 12, 2013

Income Distribution in Network Markets

Posted by D. Daniel Sokol

Corrado Benassi (Universiy of Bologna) and Marcella Scrimitore (University of Salento) analyze Income Distribution in Network Markets.

ABSTRACT: We enquiry about the effects of first and second order stochastic dominance shifts of the distribution of the consumers’ willingness to pay, within the standard model of a market with network externalities and hump-shaped demand curve. This issue is analyzed in the polar cases of perfect competition and monopoly. We find that, while under perfect competition both types of distributional changes result in higher output, provided marginal costs are low enough, in the monopoly case the final outcome depends on the way income distribution and the network externality interact in determining market demand elasticity.

http://lawprofessors.typepad.com/antitrustprof_blog/2013/04/income-distribution-in-network-markets-.html

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