%0 Report %1 NBERw26485 %A Gans, Joshua S %B Working Paper Series %D 2019 %K 2019 economics facebook google %N 26485 %R 10.3386/w26485 %T The Specialness of Zero %U http://www.nber.org/papers/w26485 %X A model is provided whereby a monopolist firm chooses to price its product at zero. This outcome is shown to be driven by the assumption of ‘free disposal’ alongside selection markets (where prices impact on a firm’s costs). Free disposal creates a mass point of consumers whose utility from the product is zero. When costs are negative, the paper shows that a zero price equilibrium can emerge. The paper shows that this outcome can be socially optimal and that, while a move from monopoly to competition can result in a negative price equilibrium, this can be welfare reducing. The conclusion is that zero can be a ‘special zone’ with respect to policy analysis such as in antitrust.

@techreport{NBERw26485, abstract = {A model is provided whereby a monopolist firm chooses to price its product at zero. This outcome is shown to be driven by the assumption of ‘free disposal’ alongside selection markets (where prices impact on a firm’s costs). Free disposal creates a mass point of consumers whose utility from the product is zero. When costs are negative, the paper shows that a zero price equilibrium can emerge. The paper shows that this outcome can be socially optimal and that, while a move from monopoly to competition can result in a negative price equilibrium, this can be welfare reducing. The conclusion is that zero can be a ‘special zone’ with respect to policy analysis such as in antitrust.}, added-at = {2020-01-18T20:56:05.000+0100}, author = {Gans, Joshua S}, biburl = {https://www.bibsonomy.org/bibtex/2914e4808739e7ca6a01ba5dd6044753d/analyst}, description = {The Specialness of Zero}, doi = {10.3386/w26485}, institution = {National Bureau of Economic Research}, interhash = {86320d87e3bb47ca9959403bdb04b100}, intrahash = {914e4808739e7ca6a01ba5dd6044753d}, keywords = {2019 economics facebook google}, month = {November}, number = 26485, series = {Working Paper Series}, timestamp = {2020-01-18T20:56:05.000+0100}, title = {The Specialness of Zero}, type = {Working Paper}, url = {http://www.nber.org/papers/w26485}, year = 2019 }