Demand Curvature and Pass-Through in Differentiated Oligopoly
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arXiv
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| Format: | Preprint |
| Published: |
2026
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| _version_ | 1866917431053647872 |
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| author | Koh, Paul S. |
| author_facet | Koh, Paul S. |
| contents | This paper studies cost pass-through in differentiated-product oligopoly. I derive a general representation of the pass-through matrix that decomposes equilibrium price responses into the roles of demand curvature, substitution, and multiproduct ownership. This extends the classic insight in single-product monopoly to multiproduct settings in which diversion and ownership also matter. I then develop a tractable first-order approximation that yields a sufficient-statistics characterization for empirically relevant demand systems. Finally, I characterize the small-share limit and show how common demand specifications impose tail restrictions that shape pass-through. The results provide a practical framework for applied work on tax incidence, merger analysis, and related questions in imperfect competition. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2604_21423 |
| institution | arXiv |
| publishDate | 2026 |
| record_format | arxiv |
| spellingShingle | Demand Curvature and Pass-Through in Differentiated Oligopoly Koh, Paul S. General Economics Economics This paper studies cost pass-through in differentiated-product oligopoly. I derive a general representation of the pass-through matrix that decomposes equilibrium price responses into the roles of demand curvature, substitution, and multiproduct ownership. This extends the classic insight in single-product monopoly to multiproduct settings in which diversion and ownership also matter. I then develop a tractable first-order approximation that yields a sufficient-statistics characterization for empirically relevant demand systems. Finally, I characterize the small-share limit and show how common demand specifications impose tail restrictions that shape pass-through. The results provide a practical framework for applied work on tax incidence, merger analysis, and related questions in imperfect competition. |
| title | Demand Curvature and Pass-Through in Differentiated Oligopoly |
| topic | General Economics Economics |
| url | https://arxiv.org/abs/2604.21423 |