An Equilibrium Theory of Rationing.
Committing to prices that result in rationing may be more profitable than setting market-clearing prices if customers must make sunk investments to enter the market. Rationing is ex post inefficient, but it gives more surplus to lower-value customers who are the marginal consumers the monopolists wa...
| Main Authors: | , |
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| Format: | Journal article |
| Language: | English |
| Published: |
2000
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| _version_ | 1797066393837895680 |
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| author | Gilbert, R Klemperer, P |
| author_facet | Gilbert, R Klemperer, P |
| author_sort | Gilbert, R |
| collection | OXFORD |
| description | Committing to prices that result in rationing may be more profitable than setting market-clearing prices if customers must make sunk investments to enter the market. Rationing is ex post inefficient, but it gives more surplus to lower-value customers who are the marginal consumers the monopolists want to tempt to make investments. Similarly, a monopsonist may procure some requirements from high-cost "second sources" rather than purchase only from the lowest-cost suppliers. The model contributes to the theory of auctions with endogenous entry, and it may also help explain "efficiency wages," "second prizes," and "fair" behavior. |
| first_indexed | 2024-03-06T21:41:25Z |
| format | Journal article |
| id | oxford-uuid:48111b1d-1d0d-4701-9d59-aa42654d70cf |
| institution | University of Oxford |
| language | English |
| last_indexed | 2024-03-06T21:41:25Z |
| publishDate | 2000 |
| record_format | dspace |
| spelling | oxford-uuid:48111b1d-1d0d-4701-9d59-aa42654d70cf2022-03-26T15:23:27ZAn Equilibrium Theory of Rationing.Journal articlehttp://purl.org/coar/resource_type/c_dcae04bcuuid:48111b1d-1d0d-4701-9d59-aa42654d70cfEnglishDepartment of Economics - ePrints2000Gilbert, RKlemperer, PCommitting to prices that result in rationing may be more profitable than setting market-clearing prices if customers must make sunk investments to enter the market. Rationing is ex post inefficient, but it gives more surplus to lower-value customers who are the marginal consumers the monopolists want to tempt to make investments. Similarly, a monopsonist may procure some requirements from high-cost "second sources" rather than purchase only from the lowest-cost suppliers. The model contributes to the theory of auctions with endogenous entry, and it may also help explain "efficiency wages," "second prizes," and "fair" behavior. |
| spellingShingle | Gilbert, R Klemperer, P An Equilibrium Theory of Rationing. |
| title | An Equilibrium Theory of Rationing. |
| title_full | An Equilibrium Theory of Rationing. |
| title_fullStr | An Equilibrium Theory of Rationing. |
| title_full_unstemmed | An Equilibrium Theory of Rationing. |
| title_short | An Equilibrium Theory of Rationing. |
| title_sort | equilibrium theory of rationing |
| work_keys_str_mv | AT gilbertr anequilibriumtheoryofrationing AT klempererp anequilibriumtheoryofrationing AT gilbertr equilibriumtheoryofrationing AT klempererp equilibriumtheoryofrationing |