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A Cooperative Game Theory Model of Quantity Discounts

Author

Listed:
  • Rajeev Kohli

    (Joseph M. Katz Graduate School of Business, University of Pittsburgh, Pittsburgh, Pennsylvania 15260)

  • Heungsoo Park

    (College of Business and Economics, Yonsei University, Seoul, Korea)

Abstract

Quantity discounts offered by a monopolist are considered in the context of a bargaining problem in which the buyer and the seller negotiate over the order quantity and the average unit price. All-units and incremental quantity discounts that permit transaction at a negotiated outcome are described. The effects of risk sensitivity and bargaining power on quantity discounts are discussed for alternative bargaining models.

Suggested Citation

  • Rajeev Kohli & Heungsoo Park, 1989. "A Cooperative Game Theory Model of Quantity Discounts," Management Science, INFORMS, vol. 35(6), pages 693-707, June.
  • Handle: RePEc:inm:ormnsc:v:35:y:1989:i:6:p:693-707
    DOI: 10.1287/mnsc.35.6.693
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