A Model of Shareholder Discounts
AbstractMany companies supplying consumption goods and services provide their shareholders with price discounts. This paper presents a simple model describing shareholder discounts and consequent market equilibrium. It is found that shareholder discounts resemble many features of two-part tariffs. The welfare analysis shows that the equilibrium outcomes with shareholder discounts are Pareto inefficient. Compared with uniform pricing, shareholder discounts unambiguously increase major shareholders' wealth but their effects on consumers and society are generally ambiguous. Copyright 2001 by The Economic Society of Australia.
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Bibliographic InfoArticle provided by The Economic Society of Australia in its journal The Economic Record.
Volume (Year): 77 (2001)
Issue (Month): 236 (March)
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- Kelton, Christina M.L. & Rebelein, Robert P., 2005.
"A General-Equilibrium Analysis of Public Policy for Pharmaceutical Prices,"
Vassar College Department of Economics Working Paper Series
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- Xiangkang Yin, 2000.
"Two-part tariff competition in duopoly,"
2000.11, School of Economics, La Trobe University.
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