The Relative Price of Services

Bounding the relative profitability of price discrimination

We derive bounds on the ratio of a monopolist’s profit from third-degree price discrimination to that from uniform pricing. If the monopolist serves N independent markets, demand is continuous, and the cost function is superadditive, then the profit ratio is bounded by N. A linear-demand example is provided coming arbitrarily close to this bound. We provide examples showing the profit ratio can...

Direct welfare analysis of relative price regulation

The paper synthesizes and develops the welfare analysis of regulating relative prices, for example price differences, of which banning price discrimination is a special case. Welfare results are derived directly by convexity arguments using functions of welfare levels. The method is also used to obtain results about effects on consumer surplus.

Inflation And Relative Price Dispersion: Evidence For Iran

Economic growth and the relative price of capital

This paper examines empirically the relationship between the relative price of capital and the rate of economic growth. In the results. machinery appears to bc the most important component of capital: when the relative price of machinery and the relative price of nonmachinery are included in a Barro ( 199 1) growth regression, a strong negative relationship between growth and the machinery pric...

A Reappraisal of the Border Effect on Relative Price Volatility

Engel & Rogers (1996) find that crossing the US–Canada border can considerably raise relative price volatility and that exchange rate fluctuations explain about one-third of the volatility increase. Using a decomposition method, this study re-evaluates the border effect. It is shown that cross-country heterogeneity in price volatility can induce a bias in measuring the border effect unless prop...