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Cost Pass-Through with Network Externalities

Author

Listed:
  • 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.

Suggested Citation

  • Anna Laura Baraldi & Christian Rojas, 2011. "Cost Pass-Through with Network Externalities," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 10(3), pages 177-199, December.
    • Handle: RePEc:ijb:journl:v:10:y:2011:i:3:p:177-199
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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