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Market power under income polarization (1999)

Benassi, Corrado ; Cellini, Roberto ; Chirco, Alessandra

Springer

Journal of economics 69 (1999), S. 289-298

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ISSN: 1617-7134

Keywords: monopoly ; markup ; income polarization ; D31 ; D42

Source: Springer Online Journal Archives 1860-2000

Topics: Economics

Notes: Abstract We study the reaction of a monopolistic firm to distributive shocks which lead to income polarization. We show that the movements in the set price and in the sold quantity depend on the served market share. In particular, we identify a region of parameters where the optimal markup moves in the opposite direction of market demand: in this respect, distributive shocks can provide an explanation for countercyclical movements of the markup.

Type of Medium: Electronic Resource

URL: http://dx.doi.org/10.1007/BF01231163

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