Equation (1) describes the VPC framework, which divides superior performance into consumer surplus (V
– P) and supplier surplus (P – C). For a firm i, Qi is the total volume of the product sold; pi is the selling price; ci is the average cost; vij and cij denote the marginal value and the marginal cost of the jth quantity consumed,
respectively; for quantity qij = qik, vik = pi. Thus, the marginal value vik that the marginal consumer k obtains from the
last consumption unit qik equals the market price pi, i.e., vik = pi. While the individual consumer’s willingness to pay
for each unit of the product (vij) is not accessible, and the (Vi − Ci ) is difficult to measure, the aggregated
differences between the market price and the cost of the quantity sold ( ( ) pi − ci × Qi ) can measure the minimum
value of (Vi − Ci ) and can be used to indicate the competitive advantage of firm i. There are two reasons for this
minimal value estimation approach: (1) the marginal consumer’s perception of the last unit consumed equals the
market price, and all above-margin consumers perceive higher value than the price; and (2) neither the consumers’
perceived value nor the price represents the net value the firm can enjoy; rather, this is the profit p – c.