In this paper we study the ability of the 19-th century Italian government to choose profit maximising prices for a multiproduct monopolist. We use very detailed historical data on the tobacco consumption in 62 Italian provinces from 1871 to 1888 to estimate a differentiated product demand system. The demand conditions and the legal environment of the period made this market as close to a textbook monopoly as is practically possible. The government's stated aim for this industry was profit maximisation: since at the time tobacco revenues constituted between 10 and 15 percent of the revenues for the cash-strapped government, the stated aim was very likely the true one. Cost data for the nine products suggest that the government was not wide off the mark: the tobacco prices were ``not far'' from those dictated by the standard monopoly formulae for profit maximisation with interdependent demand functions.
|Titolo:||How Hard is it to Maximise Profit? Evidence from a 19th Century Italian Monopoly.|
|Citazione:||Tiezzi, S., Ciccarelli, C., & De Fraja, G. (2018). How Hard is it to Maximise Profit? Evidence from a 19th Century Italian Monopoly. CENTRE FOR ECONOMIC POLICY RESEARCH DISCUSSION PAPERS(12907), 1-31.|
|Appare nelle tipologie:||1.1 Articolo in rivista|