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Spatial monopoly pricing under non-constant marginal costs

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  • Graubner, Marten

Abstract

The firm’s price policy decision is a central issue in spatial economics. Previous results show, e.g., that the specification of consumers’ demand functions is pivotal but mostly mill and uniform pricing are compared in a monopoly setting with constant marginal costs. The results in this paper highlight that some conclusions of prior work do not hold if the monopolist operates under non-constant marginal production costs. For instance, the optimal price is no longer independent of transport costs, and the welfare ranking of mill and uniform pricing also depends on the shape of the cost function.

Suggested Citation

  • Graubner, Marten, 2020. "Spatial monopoly pricing under non-constant marginal costs," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 13(1), pages 81-97.
    • Handle: RePEc:zbw:espost:222429
    DOI: 10.1007/s12076-020-00246-1
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    References listed on IDEAS

    as
    1. Martin J. Beckmann, 1976. "Spatial Price Policies Revisited," Bell Journal of Economics, The RAND Corporation, vol. 7(2), pages 619-630, Autumn.
    2. Beckmann, Martin J. & Ingene, Charles A., 1976. "The profit equivalence of mill and uniform pricing policies," Regional Science and Urban Economics, Elsevier, vol. 6(3), pages 327-329, September.
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    More about this item

    Keywords

    spatial pricing; price discrimination; monopoly;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis

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