4 ms·
You can just use the gross margin accounting definition, this isn't too difficult and firms should be roughly compliant. Also, firm profits should be higher tha
by oli5679 10y ago
You can just use the gross margin accounting definition, this isn't too difficult and firms should be roughly compliant. Also, firm profits should be higher than if you ban price-discrimination, so I don't see where the political resistance would come from?
There are issues with:
1) Estimating the demand system and so picking the optimal gross margin. However, banning price discrimination is also relatively blunt and leads to a somewhat arbitrary outcomes from a welfare perspective.
2) Effects on firm incentives to reduce costs. If a firm knows that it will be subject to maximum gross margin restrictions in the future, it will have a weaker incentive to innovate possibly?