Estimating markups under nonlinear pricing competition

Arbeitspapier

This paper provides a structural interpretation to the estimates of the shape and position of nonlinear tariffs. We focus on the evaluation of price-cost margins, and thus we need to identify marginal cost from an equilibrium model of nonlinear pricing competition. We estimate these price-cost margins using quarterly data from the early U.S. cellular telephone industry between 1984 and 1988. Our results indicate that the margins are increased under duopoly, due to a significant reduction in marginal costs. Moreover, we find that the price-cost margins vary over the consumption levels and that low end users are subject to higher price-cost margins than high-end users. The impact of competition further increases the margins in the low-end user segment, relative to high endusers. In that sense the benefits of competition, which are largely due to increased efficiencies, are passed on relatively more to high-end users. We also show that these findings are robust even if one includes a number of observable market demand and cost variables.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: WZB Discussion Paper ; No. SP II 2003-21

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Asymmetric and Private Information; Mechanism Design ; Telecommunications
• Thema: Estimation of Equilibrium Oligopoly Models ; Competitive Nonlinear Pricing ; Common Agency

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Miravete, Eugenio J. ; Röller, Lars-Hendrik
• Ereignis: Veröffentlichung
• (wer): Wissenschaftszentrum Berlin für Sozialforschung (WZB)
• (wo): Berlin
• (wann): 2003

Weitere Informationen

• Handle: http://hdl.handle.net/10419/50940
• Letzte Aktualisierung: 10.03.2025, 11:45 MEZ