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Consumer heterogeneity and inefficiency in oligopoly markets

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  • Tan, Guofu
  • Zhou, Junjie

Abstract

Motivated by several recent studies on oligopolistic markets with consumer heterogeneity, we characterize the geometric properties of a class of inequalities involving the product of two integrals of the probability density quantile function and its reciprocal. Through three applications, we illustrate how our characterization can help enrich our understanding of the existing findings and shed some new insights, regarding the extent to which consumer welfare and social efficiency depend on the properties of the distributions of consumer valuation heterogeneity.

Suggested Citation

  • Tan, Guofu & Zhou, Junjie, 2024. "Consumer heterogeneity and inefficiency in oligopoly markets," Journal of Economic Theory, Elsevier, vol. 220(C).
    • Handle: RePEc:eee:jetheo:v:220:y:2024:i:c:s0022053124000887
    DOI: 10.1016/j.jet.2024.105882
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Probability density quantile; Discrete choice model; Consumer heterogeneity; Log-concavity; Free entry; Efficiency; Competitive bundling; Multi-sided markets;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L4 - Industrial Organization - - Antitrust Issues and Policies

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