Bornstein, Gideon; Peter, Alessandra - National Bureau of Economic Research - 2024
This paper studies the effect of nonlinear pricing on markups and misallocation. We develop a general equilibrium model … of firms that are allowed to set a quantity-dependent pricing schedule--contrary to the typical assumption in … macroeconomic models. Without the restriction to linear pricing, markup heterogeneity is no longer a sign of misallocation. Larger …