Robust Welfare under Imperfect Competition

Abstract

We study welfare analysis for policy changes when supply and demand behavior are only partially known. We augment the robust approach pioneered by Kang and Vasserman (2025) by incorporating the supply side. We posit intervals of feasible pass-through and conduct (market-power) parameters, then apply them to two equilibrium snapshots to characterize the extremal supply-side terms entering welfare. We show that the supply-side bounds are attained by inverse pass-through functions that take only the two endpoint values of the specified interval, separated by a single price cutoff. Combining these supply-side extrema with demand-side shape restrictions, we produce simple bounds for consumer surplus, producer surplus, total surplus, and deadweight loss.