Double marginalization and cost pass-through: Weyl–Fabinger and Cowan meet Spengler and Bresnahan–Reiss |
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Authors: | Takanori Adachi Takeshi Ebina |
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Institution: | 1. School of Economics, Nagoya University, Chikusa, Nagoya 464-8601, Japan;2. Faculty of Economics, Shinshu University, 3-1-1 Asahi, Matsumoto, Nagano 390-8621, Japan |
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Abstract: | Consider the classical double marginalization problem of single-product successive monopolies. We show that the ratio of the cost pass-through at the final sale relative to that at the wholesale level is characterized by the curvature of inverse demand in the final market. We also apply Cowan’s (2012) method, which utilizes the idea of pass-through in an analysis of third-degree price discrimination, to compare consumer surplus under vertical integration and separation. |
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Keywords: | D43 L11 L13 |
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