Consumer Surplus and CES Demand

descriptionPublicationkeyboard_double_arrow_right Part of book or chapter of book , Article 06 May 2015 Netherlands English Publisher:World Scientific Pub Co Pte LtdJournal:Oxford Economic Papers, volume 67, pages 1,165-1,173 (issn: 0030-7653, eissn: 1464-3812,

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Authors: ten Raa, Thijs;

doi: 10.1142/9789811233296_0010 , 10.1093/oep/gpv035

Consumer Surplus and CES Demand

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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.

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Netherlands

Related Organizations

Tilburg University
Netherlands

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