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On the Optimal Pricing Policy of a Monopolist

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  • Wilson, Charles A
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    Abstract

    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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    Bibliographic Info

    Article provided by University of Chicago Press in its journal Journal of Political Economy.

    Volume (Year): 96 (1988)
    Issue (Month): 1 (February)
    Pages: 164-76

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    Handle: RePEc:ucp:jpolec:v:96:y:1988:i:1:p:164-76

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    Web page: http://www.journals.uchicago.edu/JPE/

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    Cited by:
    1. Spiegler, Ran, 2006. "Competition over agents with boundedly rational expectations," Theoretical Economics, Econometric Society, vol. 1(2), pages 207-231, June.
    2. Philippe Choné & Romain De Nijs & Lionel Wilner, 2012. "Intertemporal Pricing with Unobserved Consumer Arrival Times," Working Papers 2012-23, Centre de Recherche en Economie et Statistique.
    3. Li, Michael Z. F., 2001. "Pricing non-storable perishable goods by using a purchase restriction with an application to airline fare pricing," European Journal of Operational Research, Elsevier, vol. 134(3), pages 631-647, November.
    4. Volker Nocke & Martin Peitz, 2004. "Monopoly Pricing under Demand Uncertainty: Final Sales versus Introductory Offers," PIER Working Paper Archive 04-027, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    5. Nocke, Volker & Peitz, Martin & Rosar, Frank, 2011. "Advance-purchase discounts as a price discrimination device," Journal of Economic Theory, Elsevier, vol. 146(1), pages 141-162, January.
    6. Li, Michael Z. F., 2005. "Pricing non-storable perishable goods by using a purchase restriction: General optimality results," European Journal of Operational Research, Elsevier, vol. 161(3), pages 838-853, March.
    7. Malighetti, Paolo & Paleari, Stefano & Redondi, Renato, 2009. "Pricing strategies of low-cost airlines: The Ryanair case study," Journal of Air Transport Management, Elsevier, vol. 15(4), pages 195-203.
    8. Che, Yeon-Koo & Gale, Ian, 2000. "The Optimal Mechanism for Selling to a Budget-Constrained Buyer," Journal of Economic Theory, Elsevier, vol. 92(2), pages 198-233, June.

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