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On the Uniqueness of Optimal Prices Set by Monopolistic Sellers

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  • Van den Berg, Gerard

Abstract

This paper considers price determination by monopolistic sellers who know the distribution of valuations among the potential buyers. We derive a novel condition under which the optimal price set by the monopolist is unique. In many settings, this condition is easy to interpret, and it is valid for a very wide range of distributions of valuations. The results carry over to the optimal minimum price in independent private value auctions. In addition, they can be fruitfully applied in the analysis of quantity discount price policies.

Suggested Citation

  • Van den Berg, Gerard, 2005. "On the Uniqueness of Optimal Prices Set by Monopolistic Sellers," CEPR Discussion Papers 5166, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:5166
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    Cited by:

    1. Tarasov, Alexander, 2009. "Consumer Preferences in Monopolistic Competition Models," MPRA Paper 19990, University Library of Munich, Germany.
    2. Gerard J. van den Berg & Bas van der Klaauw, 2007. "If Winning isn't Everything, why do they keep Score? A Structural Empirical Analysis of Dutch Flower Auctions," Tinbergen Institute Discussion Papers 07-041/3, Tinbergen Institute.
    3. Eduard Calvo & Victor Martínez-de-Albéniz, 2016. "Sourcing Strategies and Supplier Incentives for Short-Life-Cycle Goods," Management Science, INFORMS, vol. 62(2), pages 436-455, February.
    4. Christian Ewerhart, 2013. "Regular type distributions in mechanism design and $$\rho $$ -concavity," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 53(3), pages 591-603, August.
    5. Ivanov, Maxim, 2009. "Niche market or mass market?," Economics Letters, Elsevier, vol. 105(3), pages 217-220, December.
    6. Alexander Tarasov, 2014. "Preferences and income effects in monopolistic competition models," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 42(3), pages 647-669, March.
    7. Leonardos Stefanos & Melolidakis Costis, 2020. "On the Equilibrium Uniqueness in Cournot Competition with Demand Uncertainty," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 20(2), pages 1-6, June.
    8. Desheng Wu, 2017. "Pass-through decision analysis in a supply chain," Annals of Operations Research, Springer, vol. 257(1), pages 297-316, October.
    9. Dominic Coey & Bradley J. Larsen & Kane Sweeney & Caio Waisman, 2021. "Scalable Optimal Online Auctions," Marketing Science, INFORMS, vol. 40(4), pages 593-618, July.
    10. Jobjörnsson, Sebastian & Forster, Martin & Pertile, Paolo & Burman, Carl-Fredrik, 2016. "Late-stage pharmaceutical R&D and pricing policies under two-stage regulation," Journal of Health Economics, Elsevier, vol. 50(C), pages 298-311.
    11. Stefanos Leonardos & Costis Melolidakis & Constandina Koki, 2022. "Monopoly pricing in vertical markets with demand uncertainty," Annals of Operations Research, Springer, vol. 315(2), pages 1291-1318, August.

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    More about this item

    Keywords

    Monopoly; Auction; Regularity; Minimum price; Hazard price; Hazard rate; Quantity discount; Reservation price; Local maxima;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts

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