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Markets of joint products: A theoretical model and policy implications

Author

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  • Shastitko, Andrey
  • Shastitko, Anastasia

Abstract

The article considers the phenomenon of price behavior in markets of joint products. It shows that conclusions about the nature of economic entities’ behavior on this type of market could be inaccurate if the characteristics of these markets, such as joint costs, are not taken into account. For this purpose, a theoretical model, built according to basic microeconomic principals, is applied. This model provides an opportunity to reveal—without further new institutional analysis —that the reason for price deviation from a competitive level does not always lie in actions restricting competition.

Suggested Citation

  • Shastitko, Andrey & Shastitko, Anastasia, 2015. "Markets of joint products: A theoretical model and policy implications," Russian Journal of Economics, Elsevier, vol. 1(2), pages 199-216.
    • Handle: RePEc:eee:rujoec:v:1:y:2015:i:2:p:199-216
    DOI: 10.1016/j.ruje.2015.11.001
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    References listed on IDEAS

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    1. Marshall R. Colberg, 1941. "Monopoly Prices Under Joint Costs: Fixed Proportions," Journal of Political Economy, University of Chicago Press, vol. 49(1), pages 103-103.
    2. Richard Schmalensee, 2012. "“On a Level with Dentists?” Reflections on the Evolution of Industrial Organization," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 41(3), pages 157-179, November.
    3. R. H. Coase, 1972. "Industrial Organization: A Proposal for Research," NBER Chapters, in: Economic Research: Retrospect and Prospect, Volume 3, Policy Issues and Research Opportunities in Industrial Organization, pages 59-73, National Bureau of Economic Research, Inc.
    4. James P. Houck, 1964. "Price Elasticities and Joint Products," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 46(3), pages 652-656.
    5. T. J. Kreps, 1930. "Joint Costs in the Chemical Industry," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 44(3), pages 416-461.
    6. Graham, John W & Green, Carole A, 1984. "Estimating the Parameters of a Household Production Function with Joint Products," The Review of Economics and Statistics, MIT Press, vol. 66(2), pages 277-282, May.
    7. Roger Blair & Jessica Haynes, 2012. "A Note on the Consequences of Monopsony When Goods are Jointly Produced in Fixed Proportions," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 40(1), pages 75-83, February.
    8. Piggott, Nicholas E. & Wohlgenant, Michael K., 2002. "Price elasticities, joint products, and international trade," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 46(4), pages 1-14.
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    Cited by:

    1. Avdasheva, S., 2017. "Theory of Competition for Economic Policy," Journal of the New Economic Association, New Economic Association, vol. 35(3), pages 170-176.
    2. Jordan, Brett, 2018. "Economics literature on joint production of minerals: A survey," Resources Policy, Elsevier, vol. 55(C), pages 20-28.

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    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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