Markets of joint products: A theoretical model and policy implications

Abstract

The article considers the phenomenon of price behavior in markets of joint products. It shows that conclusions about the nature of economic entities' behavior on this type of market could be inaccurate if the characteristics of these markets, such as joint costs, are not taken into account. For this purpose, a theoretical model, built according to basic microeconomic principals, is applied. This model provides an opportunity to reveal - without further new institutional analysis - that the reason for price deviation from a competitive level does not always lie in actions restricting competition.