Many companies supplying consumption goods and services provide their shareholders with price discounts when they consume them. Although this practice is not uncommon it has not been analyzed to date. This paper presents a simple model describing shareholder discounts and consequent market equilibrium, which resembles some features of two-part tariffs. The welfare analysis shows that discounts definitely increase major shareholders' wealth in contrast to the benchmark case of uniform pricing. Their effects on consumers and the whole society are generally ambiguous but certain sufficient conditions ensuring definite conclusions are given. It is also found that the equilibrium outcome of shareholder discount is Pareto inefficient.
Download Info
To our knowledge, this item is not available for
download. To find whether it is available, there are three
options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page
whether it is in fact available.
3. Perform a search for a similarly titled item that would be
available.
Publisher Info
Paper provided by La Trobe - Department of Economics in its series Papers with number
99.04.
Find related papers by JEL classification: D42 - Microeconomics - - Market Structure and Pricing - - - Monopoly L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)