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Ramsey pricing: a simple example of a subordinate commodity

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  • Paolo Bertoletti

Abstract

We present preferences exhibiting a so-called subordinate good, namely a commodity that receives a negative price-cost margin according to Ramsey pricing. We also show that they deliver Ramsey quantities proportional to the efficient ones.

Suggested Citation

  • Paolo Bertoletti, 2021. "Ramsey pricing: a simple example of a subordinate commodity," Working Papers 459, University of Milano-Bicocca, Department of Economics.
    • Handle: RePEc:mib:wpaper:459
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    References listed on IDEAS

    as
    1. Okuguchi, Koji, 1987. "Equilibrium prices in the Bertrand and Cournot oligopolies," Journal of Economic Theory, Elsevier, vol. 42(1), pages 128-139, June.
    2. Mark Armstrong & John Vickers, 2018. "Multiproduct Pricing Made Simple," Journal of Political Economy, University of Chicago Press, vol. 126(4), pages 1444-1471.
    3. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
    4. Brown,Stephen J. & Sibley,David Sumner, 1986. "The Theory of Public Utility Pricing," Cambridge Books, Cambridge University Press, number 9780521314008, December.
    5. Bertoletti, Paolo, 2018. "A note on Ramsey pricing and the structure of preferences," Journal of Mathematical Economics, Elsevier, vol. 76(C), pages 45-51.
    6. Paolo Bertoletti & Federico Etro, 2021. "Monopolistic competition with generalized additively separable preferences," Oxford Economic Papers, Oxford University Press, vol. 73(2), pages 927-952.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Subordinate Commodity; Negative Price-Cost Margin; Ramsey Pricing;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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