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A Model of Shareholder Discounts

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  • Xiangkang Yin

Abstract

Many 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.

Suggested Citation

  • Xiangkang Yin, 2001. "A Model of Shareholder Discounts," The Economic Record, The Economic Society of Australia, vol. 77(236), pages 89-102, March.
    • Handle: RePEc:bla:ecorec:v:77:y:2001:i:236:p:89-102
    DOI: 10.1111/1475-4932.00006
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    Cited by:

    1. Yin, Xiangkang, 2004. "Two-part tariff competition in duopoly," International Journal of Industrial Organization, Elsevier, vol. 22(6), pages 799-820, June.
    2. Christina M. L. Kelton & Robert P. Rebelein, 2007. "A General‐Equilibrium Analysis of Public Policy for Pharmaceutical Prices," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 9(2), pages 285-318, April.

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