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Paolo Bertoletti
''Monopolistic Marginal Cost Pricing''
( 2016, Vol. 36 No.3 )
It is usually argued that the monopolistic pricing distortion arises because "a monopoly can raise its price above marginal cost without losing all its clients" (Tirole, 1988). We discuss a simple well-behaved example in which: i) monopoly price gets as close as desired to marginal cost, and ii) nevertheless it is associated to a significant dead-weight welfare loss.
Keywords: Monopoly Pricing, Consumer Preferences.
JEL: D4 - Market Structure and Pricing: General
D1 - Household Behavior: General
Manuscript Received : May 05 2016 Manuscript Accepted : Jul 17 2016

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