Artikel
Two extensions of consumer surplus
We study consumer surplus in a single market when (a) there is a lower bound in the consumption of the outside good and (b) the weights in the social welfare function given to consumers and firms are different. We assume quasilinear utility. When the lower bound constraint on the consumption of the outside good is binding, income effects arise in demand. In some cases, Cournot equilibrium output is below equilibrium output without this constraint because the constraint makes demand less elastic. When the weights given to consumers and firms are not identical, social welfare is not necessarily concave and profits might be negative at the unrestricted optimum. We characterize social welfare optimum with a bound on maximum losses in a class of utility functions. We offer a formula to find the percentage of welfare losses due to oligopoly in this case.
- Language
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Englisch
- Bibliographic citation
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Journal: SERIEs - Journal of the Spanish Economic Association ; ISSN: 1869-4195 ; Volume: 13 ; Year: 2022 ; Issue: 3 ; Pages: 557-579
- Classification
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Wirtschaft
Consumer Economics: Theory
Distribution: Other
Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
Welfare Economics: Other
Monopoly; Monopolization Strategies
Oligopoly and Other Imperfect Markets
- Subject
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Market power
Nonnegativity constraint in the outside good
Oligopoly welfare losses
Social welfare
- Event
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Geistige Schöpfung
- (who)
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Corchón, Luis C.
Torregrosa-Montaner, Ramón J.
- Event
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Veröffentlichung
- (who)
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Springer
- (where)
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Heidelberg
- (when)
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2022
- DOI
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doi:10.1007/s13209-021-00245-5
- Last update
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10.03.2025, 11:43 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Artikel
Associated
- Corchón, Luis C.
- Torregrosa-Montaner, Ramón J.
- Springer
Time of origin
- 2022
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