On the Use of Ceiling-Price Commitment by Monopolists
AbstractThe establishment of an asking, or ceiling, price from which reductions can be bargained is a common selling practice. For a monopolist seller of a single object, this article characterizes the best such ceiling price and shows that its use is optimal among all incentive-compatible mechanisms in a class of situations characterized by customers (1) who arrive one at a time and so do not compete with other directly and (2) who learn their idiosyncratic willingnesses to pay only by incurring idiosyncratic inspection costs.
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Bibliographic InfoPaper provided by Boston University - Industry Studies Programme in its series Papers with number 45.
Length: 21 pages
Date of creation: 1994
Date of revision:
Contact details of provider:
Postal: Boston University, Industry Studies Program; Department of Economics, 270 Bay Road, Boston, Massachusetts 02215.
Web page: http://www.bu.edu/econ/isp/
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game theory ; prices;
Other versions of this item:
- Yongmin Chen & Robert W. Rosenthal, 1996. "On the Use of Ceiling-Price Commitments by Monopolists," RAND Journal of Economics, The RAND Corporation, vol. 27(2), pages 207-220, Summer.
- Yongmin Chen & Robert W. Rosenthal, 1994. "On the Use of Ceiling-Price Commitments by Monopolists," Papers 0045, Boston University - Industry Studies Programme.
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- Antonio M. Merlo & François Ortalo-Magné, 2002.
"Bargaining over Residential Real Estate: Evidence from England,"
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778, CESifo Group Munich.
- Merlo, Antonio & Ortalo-Magne, Francois, 2004. "Bargaining over residential real estate: evidence from England," Journal of Urban Economics, Elsevier, vol. 56(2), pages 192-216, September.
- François Ortalo-Magné & Antonio Merlo, 2002. "Bargaining over Residential Real Estate: Evidence from England," Wisconsin-Madison CULER working papers 02-02, University of Wisconsin Center for Urban Land Economic Research.
- Inami, Yusuke, 2011. "The buy price in auctions with discrete type distributions," Mathematical Social Sciences, Elsevier, vol. 61(1), pages 1-11, January.
- Gill, David & Thanassoulis, John, 2009. "The impact of bargaining on markets with price takers: Too many bargainers spoil the broth," European Economic Review, Elsevier, vol. 53(6), pages 658-674, August.
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- Wang, Ruqu, 2000. "Bidding and renegotiation in procurement auctions," European Economic Review, Elsevier, vol. 44(8), pages 1577-1597, August.
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