Consumer surplus and CES demand

Research output: Contribution to journalArticleScientificpeer-review

Abstract

This article presents the consumer surplus formula for constant elasticity of substitution (CES) demands. The formula is used to compare the monopoly and optimum provisions of product variety. It is shown that a monopolist under-provides variety. This result is contrasted with Lambertini’s analysis of the monopolist’s optimal R&D portfolio. I also contrast my approach with the indirect utility technique of Anderson, de Palma, and Thisse’s discrete choice theory of product differentiation.
LanguageEnglish
Pages1165-1173
JournalOxford Economic Papers
Volume67
Issue number4
DOIs
StatePublished - Oct 2015

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Elasticity of substitution
Consumer surplus
Monopolist
Discrete choice
Monopoly
Product differentiation
Product variety
Indirect utility
Choice theory

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ten Raa, Thijs. / Consumer surplus and CES demand. In: Oxford Economic Papers. 2015 ; Vol. 67, No. 4. pp. 1165-1173
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Consumer surplus and CES demand. / ten Raa, Thijs.

In: Oxford Economic Papers, Vol. 67, No. 4, 10.2015, p. 1165-1173.

Research output: Contribution to journalArticleScientificpeer-review

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