Antitrust & Competition Policy Blog

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

Friday, September 6, 2019

Pass-Through as an Economic Tool -- On Second Derivatives, Social Incidence, and Price Discrimination

Jeanine Miklós-Thal, University of Rochester - Simon Business School and Greg Shaffer, University of Rochester - Simon Business School address Pass-Through as an Economic Tool -- On Second Derivatives, Social Incidence, and Price Discrimination.

ABSTRACT: Weyl and Fabinger (2013) show that the social incidence of competition, and the output and welfare effects of third-degree price discrimination, can be analyzed by considering the hypothetical entrance of exogenous quantity into a market. The formulas they use for this purpose, however, are correct only for marginal changes in exogenous quantity starting at zero or if demand functions are linear. We show how using the correct formulas affects the social incidence of competition calculations and sheds new light on the output and welfare effects of third-degree price discrimination in oligopoly markets.

https://lawprofessors.typepad.com/antitrustprof_blog/2019/09/pass-through-as-an-economic-tool-on-second-derivatives-social-incidence-and-price-discrimination.html

| Permalink

Comments

Post a comment