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Vanity and Congestion: A Study of Reciprocal Externalities
Stockholm University, Faculty of Social Sciences, Department of Economics.ORCID iD: 0000-0003-0140-3031
Stockholm University, Faculty of Social Sciences, Department of Economics.
1996 (English)In: Economica, ISSN 0013-0427, E-ISSN 1468-0335, Vol. 63, no 249, p. 97-111Article in journal (Refereed) Published
Abstract [en]

This paper models a private goods oligopoly market characterized by negative and reciprocal externalities. Although firms compete in prices, and products are undifferentiated in equilibrium, the price-cost margin turns out to be positive. From a social perspective, the equilibrium price is higher than what is motivated by the negative externality. Hence welfare can be improved by means of a price ceiling. Finally, industries with high fixed costs would be expected to exhibit a high degree of concentration on the supply side and considerable price-cost margins.

Place, publisher, year, edition, pages
1996. Vol. 63, no 249, p. 97-111
Keywords [en]
Consumer economics, Consumer equilibrium, Marginal costs, Equilibrium prices, Market prices, Vanity, Market share, Consumer prices, Fixed costs
National Category
Economics
Research subject
Economics
Identifiers
URN: urn:nbn:se:su:diva-163368DOI: 10.2307/2554636OAI: oai:DiVA.org:su-163368DiVA, id: diva2:1274062
Available from: 2018-12-27 Created: 2018-12-27 Last updated: 2019-06-28Bibliographically approved

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