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Quasilinear Utility and Two Market Monopoly

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  • Stephen K. Layson

Abstract

The use of quasilinear utility functions in economic analyses is widespread. This paper presents an overdue clarification on the implications of quasilinear utility for two market monopoly. The paper begins by deriving the demands facing a two market monopoly from a representative consumer with quasilinear utility. Expressions are derived for the profit margins expressed solely in terms of the own and cross-price elasticities of demand. The paper also analyzes the implications of quasilinear utility for other issues in two market monopoly: pricing below marginal cost in a market, third-degree price discrimination when the monopoly products are substitutes and pricing in the inelastic region of demands.

Suggested Citation

  • Stephen K. Layson, 2017. "Quasilinear Utility and Two Market Monopoly," International Business Research, Canadian Center of Science and Education, vol. 10(3), pages 164-168, March.
    • Handle: RePEc:ibn:ibrjnl:v:10:y:2017:i:3:p:164-168
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    References listed on IDEAS

    as
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    3. Willig, Robert D., 1976. "Integrability implications for locally constant demand elasticities," Journal of Economic Theory, Elsevier, vol. 12(3), pages 391-401, June.
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    5. R. Schmalensee & R. Willig (ed.), 1989. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 2, number 2.
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    More about this item

    Keywords

    quasilinear utility; two product monopoly; third-degree price discrimination;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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