IDEAS home Printed from https://ideas.repec.org/a/eee/ecolet/v154y2017icp17-19.html
   My bibliography  Save this article

Pricing and production in consumer markets where sales depend on production

Author

Listed:
  • Farm, Ante

Abstract

This paper deals with consumer markets where sales depend on production. Assuming that a firm’s sale is proportional to its production, it shows that a price leader will set a price which maximizes its industry’s revenues in markets with many small firms, independent of their cost functions.

Suggested Citation

  • Farm, Ante, 2017. "Pricing and production in consumer markets where sales depend on production," Economics Letters, Elsevier, vol. 154(C), pages 17-19.
    • Handle: RePEc:eee:ecolet:v:154:y:2017:i:c:p:17-19
    DOI: 10.1016/j.econlet.2017.02.021
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165176517300666
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econlet.2017.02.021?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Ante Farm, 2017. "Pricing and price competition in consumer markets," Journal of Economics, Springer, vol. 120(2), pages 119-133, March.
    2. Farm, Ante, 1988. "Cooperative oligopolistic pricing," European Journal of Political Economy, Elsevier, vol. 4(1), pages 13-28.
    3. George J. Stigler, 1947. "The Kinky Oligopoly Demand Curve and Rigid Prices," Journal of Political Economy, University of Chicago Press, vol. 55, pages 432-432.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lierk Sousa & Vânia Roque-Specht & Eduardo Gomes, 2020. "Main Hypermarket Meat Purchasing Drivers," RAC - Revista de Administração Contemporânea (Journal of Contemporary Administration), ANPAD - Associação Nacional de Pós-Graduação e Pesquisa em Administração, vol. 24(4), pages 335-348.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ante Farm, 2017. "Pricing and price competition in consumer markets," Journal of Economics, Springer, vol. 120(2), pages 119-133, March.
    2. Farm, Ante, 2009. "Market Sharing and Price Leadership," Working Paper Series 3/2009, Stockholm University, Swedish Institute for Social Research.
    3. Farm, Ante, 2013. "Price Formation in Consumer Markets," Working Paper Series 1/2013, Stockholm University, Swedish Institute for Social Research.
    4. Boone, Jan, 2004. "Balance of Power," CEPR Discussion Papers 4733, C.E.P.R. Discussion Papers.
    5. Robert Clark & Shaoteng Li, 2022. "The Strategic Response of Banks to Macroprudential Policies: Evidence from Mortgage Stress Tests in Canada [LIBOR manipulation?]," Review of Finance, European Finance Association, vol. 26(1), pages 187-216.
    6. Pastine, Tuvana & Pastine, Ivan, 2001. "Cost of Delay, Deadlines and Endogenous Price Leadership," CEPR Discussion Papers 3054, C.E.P.R. Discussion Papers.
    7. Sascha A. Weber & Sven M. Anders, 2007. "Price rigidity and market power in German retailing," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(7), pages 737-749.
    8. Alexander L. Wolman, 2007. "The frequency and costs of individual price adjustment," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(6), pages 531-552.
    9. Surendra K. Kaushik & William L. Casey Jr., 1982. "The Kinked-Demand Model of Oligopoly: Textbook Departures from the Original Sweezy Model," The American Economist, Sage Publications, vol. 26(2), pages 25-32, October.
    10. William E. Kovacic & Carl Shapiro, 2000. "Antitrust Policy: A Century of Economic and Legal Thinking," Journal of Economic Perspectives, American Economic Association, vol. 14(1), pages 43-60, Winter.
    11. Ali, Syed Mithun & Rahman, Md. Hafizur & Tumpa, Tasmia Jannat & Moghul Rifat, Abid Ali & Paul, Sanjoy Kumar, 2018. "Examining price and service competition among retailers in a supply chain under potential demand disruption," Journal of Retailing and Consumer Services, Elsevier, vol. 40(C), pages 40-47.
    12. Matthew Weinberg & Gloria Sheu & Nathan Miller, 2019. "Oligopolistic Price Leadership and Mergers: An Empirical Model of the U.S. Beer Industry," 2019 Meeting Papers 1210, Society for Economic Dynamics.
    13. Emilio José Archila Peñalosa, (Editor), 2020. "Aproximación teórica a la aplicación del análisis económico del derecho en materia de prácticas restrictivas de la libre competencia," Books, Universidad Externado de Colombia, Facultad de Derecho, number 1246, October.
    14. Currarini, Sergio & Marini, Marco, 2011. "Kinked norms of behaviour and cooperation," Economics Letters, Elsevier, vol. 110(3), pages 223-225, March.
    15. Boone, J., 2004. "Balance of power," Other publications TiSEM dcff47a3-8a29-4ec3-a752-8, Tilburg University, School of Economics and Management.
    16. Maman Setiawan & Grigorios Emvalomatis & Alfons Oude Lansink, 2015. "Price Rigidity and Industrial Concentration: Evidence from the Indonesian Food and Beverages Industry," Asian Economic Journal, East Asian Economic Association, vol. 29(1), pages 61-72, March.
    17. Chang, Byoung-Ky, 1999. "Three essays on imperfect competition and exchange rate pass-through in the presence of multiple exchange rates," ISU General Staff Papers 1999010108000013554, Iowa State University, Department of Economics.
    18. Ishibashi, Ikuo, 2008. "Collusive price leadership with capacity constraints," International Journal of Industrial Organization, Elsevier, vol. 26(3), pages 704-715, May.
    19. Michael Bradfield, 2007. "The Kinked Demand Curve with a Conjectural Hitch – A Micro Extension with Macro Implications," Working Papers daleconwp2007-05, Dalhousie University, Department of Economics.
    20. Vajanne, Laura, 2009. "Inferring market power from retail deposit interest rates in the euro area," Research Discussion Papers 27/2009, Bank of Finland.

    More about this item

    Keywords

    Pricing; Consumer markets; Price leadership; Proportional rationing;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolet:v:154:y:2017:i:c:p:17-19. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolet .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.