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| Volume 10, No. 3,
December
2011 |
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Cost Pass-Through with Network
Externalities |
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| Anna
Laura Baraldi |
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Department of European Studies, Second
University of Naples, Italy |
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| Christian
Rojas |
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Department of Resource Economics,
University of Massachusetts—Amherst, U.S.A. |
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| Abstract |
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We analyze the
rate at which cost shocks are passed through to prices when the
market exhibits network externalities. We find that the pass-through
rate is smaller in the presence of network externalities. Also, the
deadweight loss created by a cost shock is smaller in a network
market. |
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Key words:
network externalities; cost pass-through; deadweight loss |
| JEL
classification:
D6; D85; H23 |
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