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Monopoly Pricing of Capacity Usage under Asymmetric Information

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  • Spulber, Daniel F

Abstract

The design of monopoly pricing strategies is examined in a general framework with an unknown population distribution of consumer characteristics and downward-sloping, multi-unit consumer demand. In addition, the monopolist has increasing marginal cost. Three pricing strategies are shown to implement the profit-maximizing allocation: reference point pricing, multi-unit competitive bidding with variable outputs, and generalized priority service. The analysis of pricing also is extended to include random capacity. Copyright 1993 by Blackwell Publishing Ltd.

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  • Spulber, Daniel F, 1993. "Monopoly Pricing of Capacity Usage under Asymmetric Information," Journal of Industrial Economics, Wiley Blackwell, vol. 41(3), pages 241-257, September.
    • Handle: RePEc:bla:jindec:v:41:y:1993:i:3:p:241-57
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    Cited by:

    1. Natalia Aizenberg & Nikolai Voropai, 2021. "The Optimal Mechanism Design of Retail Prices in the Electricity Market for Several Types of Consumers," Mathematics, MDPI, vol. 9(10), pages 1-25, May.
    2. Erica L. Plambeck & Terry A. Taylor, 2005. "Sell the Plant? The Impact of Contract Manufacturing on Innovation, Capacity, and Profitability," Management Science, INFORMS, vol. 51(1), pages 133-150, January.
    3. Ke-Wei Huang & Arun Sundararajan, 2011. "Pricing Digital Goods: Discontinuous Costs and Shared Infrastructure," Information Systems Research, INFORMS, vol. 22(4), pages 721-738, December.
    4. Matsukawa, Isamu, 2006. "Regulating a Monopoly Offering Priority Service," MPRA Paper 991, University Library of Munich, Germany.
    5. Martimort, David & Stole, Lars A., 2022. "Participation constraints in discontinuous adverse selection models," Theoretical Economics, Econometric Society, vol. 17(3), July.
    6. Isamu Matsukawa, 2009. "Regulatory effects on the market penetration and capacity of reliability differentiated service," Journal of Regulatory Economics, Springer, vol. 36(2), pages 199-217, October.
    7. Basu, Sumanta & Chakraborty, Soumyakanti & Sharma, Megha, 2015. "Pricing cloud services—the impact of broadband quality," Omega, Elsevier, vol. 50(C), pages 96-114.
    8. Sreekumar Bhaskaran & Karthik Ramachandran & John Semple, 2010. "A Dynamic Inventory Model with the Right of Refusal," Management Science, INFORMS, vol. 56(12), pages 2265-2281, December.

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