This paper presents a simple explanation of price dispersion by a monopolist assu ming only that consumers arrive in a random order and are served on a first-come-first-served basis. A firm can sometimes increase its pro fits by charging two different prices for the same good and rationing sales at the lower price. However, it is never necessary to charge m ore than two prices, and a single price is sufficient as long as eith er the marginal revenue curve is everywhere downward sloping or the m arginal cost of production is constant. Copyright 1988 by University of Chicago Press.
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Volume (Year): 96 (1988) Issue (Month): 1 (February) Pages: 164-76 Download reference. The following formats are available: HTML
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Handle: RePEc:ucp:jpolec:v:96:y:1988:i:1:p:164-76
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