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| Author: | Miravete, E. J. Röller, L.-H. |
| Title: | Estimating price-cost markups under nonlinear pricing competition |
| Journal: | Journal of the European Economic Association
2004 : APR-MAY, VOL. 2:2-3, p. 526-535 |
| Index terms: | marginal-cost pricing mobile phones USA |
| Freeterms: | nonlinear pricing competition |
| Language: | eng |
| Abstract: | This article offers a structural interpretation to the estimates of the shape and position of nonlinear tariffs. The focus is on evaluation of price-cost margins, and thus there is a need to identify marginal cost from an equilibrium model of nonlinear pricing competition. These price-cost margins are estimated using quarterly data form the early US cellular telephone industry between 1984 and 1988. The results suggest that the margins are increased under duopoly, due to a significant reduction in marginal costs. Moreover, it is found that the price-cost margins vary over the consumption levels and that low end users are subject to higher price-cost margins than high-end users. |
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