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Second-Degree Monopoly Wholesaler with Variable Ordering Costs


  • Uriel Spiegel

    (Department of Management, Bar-Ilan University, Israel and Department of Economics, University of Pennsylvania, U.S.A.)

  • Tchai Tavor

    (Department of Economics, Yisrael Valley College, Israel)


Ordering costs are usually considered as fixed costs. For the case of one seller and two identical buyers, we examine ordering charges that are proportional to the number of units ordered. We find that no extra profits will be generated, neither for the producer nor for the retailers. Thus, proportional ordering costs are not economically justified.

Suggested Citation

  • Uriel Spiegel & Tchai Tavor, 2011. "Second-Degree Monopoly Wholesaler with Variable Ordering Costs," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 10(1), pages 45-59, April.
  • Handle: RePEc:ijb:journl:v:10:y:2011:i:1:p:45-59

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    References listed on IDEAS

    1. Andrew J. Clark & Herbert Scarf, 2004. "Optimal Policies for a Multi-Echelon Inventory Problem," Management Science, INFORMS, vol. 50(12_supple), pages 1782-1790, December.
    2. Zeynep Müge Avsar & Melike Baykal‐Gürsoy, 2002. "Inventory control under substitutable demand: A stochastic game application," Naval Research Logistics (NRL), John Wiley & Sons, vol. 49(4), pages 359-375, June.
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    More about this item


    retailers; ordering charges; excess demand; excess supply;

    JEL classification:

    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • M11 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Production Management


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