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Nonlinear Pricing as a Cooperative Game

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Abstract

This paper characterizes nonlinear outlay schedules that are based on a cooperative surplus sharing game with transferable utility. First, the pricing game is shown to be convex and, as a consequence, to have a non-empty core. This is followed by a description of the necessary and sufficient conditions for the envy-free core to be non-empty.

Suggested Citation

  • Andersson, Tommy, 2004. "Nonlinear Pricing as a Cooperative Game," Working Papers 2004:23, Lund University, Department of Economics, revised 12 Jan 2006.
    • Handle: RePEc:hhs:lunewp:2004_023
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    References listed on IDEAS

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    1. Philippe Bernard & Jerome Wittwer, 2002. "Two-part Pricing, Public Discriminating Monopoly and Redistribution: A Note," Metroeconomica, Wiley Blackwell, vol. 53(2), pages 139-151, May.
    2. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
    3. repec:dau:papers:123456789/1694 is not listed on IDEAS
    4. Andersson, Tommy, 2005. "Profit maximizing nonlinear pricing," Economics Letters, Elsevier, vol. 88(1), pages 135-139, July.
    5. Moulin, Herve, 1996. "Cost Sharing under Increasing Returns: A Comparison of Simple Mechanisms," Games and Economic Behavior, Elsevier, vol. 13(2), pages 225-251, April.
    6. Sorenson, John R & Tschirhart, John T & Whinston, Andrew B, 1978. "A Theory of Pricing under Decreasing Costs," American Economic Review, American Economic Association, vol. 68(4), pages 614-624, September.
    7. Eric Maskin & John Riley, 1984. "Monopoly with Incomplete Information," RAND Journal of Economics, The RAND Corporation, vol. 15(2), pages 171-196, Summer.
    8. Peyton Young, H., 1998. "Cost allocation, demand revelation, and core implementation," Mathematical Social Sciences, Elsevier, vol. 36(3), pages 213-228, December.
    9. John R. Sorenson & John T. Tschirhart & Andrew B. Whinston, 1976. "A Game Theoretic Approach to Peak Load Pricing," Bell Journal of Economics, The RAND Corporation, vol. 7(2), pages 497-520, Autumn.
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    More about this item

    Keywords

    Nonlinear Pricing; Budget-Balance; Cooperative Game;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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