Package Sizes, Tariffs, Quantity Discount and Premium
AbstractWe analyze nonlinear pricing problem under monopoly using two hidden types of agents with linear demands and fully characterize all possible optimal solutions for both ordered and non-ordered demands. We show that both optimal packages can either contain Pareto-efficient quantities or one package can be undersized or oversized. All these effects are non- degenerate and are expected to hold for nonlinear demands. Surprisingly, the total output under nonlinear price discrimination with self- selection is neither unambigously realted to efficiency nor to the degree of monopoly power (demand elasticity). We also show that under limited range of parameters quantity premia can occur only when demands are ordered.
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Bibliographic InfoPaper provided by EconWPA in its series General Economics and Teaching with number 0307002.
Length: 35 pages
Date of creation: 03 Jul 2003
Date of revision:
Note: Type of Document - Acrobat PDF; prepared on IBM PC; to print on HP/PostScript/; pages: 35
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Principal-agent; self-selection; nonlinear pricing; package pricing; Pareto efficiency;
Find related papers by JEL classification:
- D42 - Microeconomics - - Market Structure and Pricing - - - Monopoly
- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
- L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Katz, Michael L, 1983. "Non-Uniform Pricing, Output and Welfare under Monopoly," Review of Economic Studies, Wiley Blackwell, vol. 50(1), pages 37-56, January.
- Katz, Michael L, 1984. "Nonuniform Pricing with Unobservable Numbers of Purchases," Review of Economic Studies, Wiley Blackwell, vol. 51(3), pages 461-70, July.
- Kokovin, Sergey & Nahata, Babu & Zhelobodko, Evgeny, 2010.
"All solution graphs in multidimensional screening,"
30025, University Library of Munich, Germany.
- Nahata, Babu & Ringbom, Staffan, 2007. "Price discrimination using linear and nonlinear pricing simultaneously," Economics Letters, Elsevier, vol. 95(2), pages 267-271, May.
- Babu Nahata & Serguei Kokovin & Evgeny Zhelobodko, 2003. "Informational Structure and Effciency in Monopoly," General Economics and Teaching 0307004, EconWPA.
- Babu Nahata & Serguei Kokovin & Evgeny Zhelobodko, 2003. "Self-Selection Under Non-Ordered Valuations: Type-Splitting, Envy-Cycles, Rationing And Efficiency," General Economics and Teaching 0307001, EconWPA.
- Kokovin Sergey & Zhelobodko Evgeniy, 2008. "Diagnosing Efficiency of Distortion in Discrete Screening," EERC Working Paper Series 08/02e, EERC Research Network, Russia and CIS.
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