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Cost Pass-Through with Network Externalities

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  • Anna Laura Baraldi

    (Department of European Studies, Second University of Naples, Italy)

  • Christian Rojas

    (Department of Resource Economics, University of Massachusetts¡XAmherst, U.S.A.)

Abstract

We analyze the rate at which cost shocks are passed through to prices when the market exhibits network externalities. We find that the pass-through rate is smaller in the presence of network externalities. Also, the deadweight loss created by a cost shock is smaller in a network market.

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Bibliographic Info

Article provided by College of Business, and College of Finance, Feng Chia University, Taichung, Taiwan in its journal International Journal of Business and Economics.

Volume (Year): 10 (2011)
Issue (Month): 3 (December)
Pages: 177-199

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Handle: RePEc:ijb:journl:v:10:y:2011:i:3:p:177-199

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Keywords: network externalities; cost pass-through; deadweight loss;

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