Package Sizes, Tariffs, Quantity Discount and Premium
We 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.
|Date of creation:||03 Jul 2003|
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- Katz, Michael L, 1984. "Nonuniform Pricing with Unobservable Numbers of Purchases," Review of Economic Studies, Wiley Blackwell, vol. 51(3), pages 461-70, July.
- 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.
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