Consumer and Trade Prices in General Equilibrium with Imperfect Competition

Abstract

A two-sector model of imperfect competition with intermediate goods is analyzed. An_x000D_ objective demand function is constructed and equilibrium studied through simulation. The_x000D_ results indicate that trade prices may exceed consumer prices and that collusion between firms_x000D_ may benefit both firms and consumers and result in intermediate goods trading at less than_x000D_ marginal cost.