Competitive and Monopolistic Price-Making

Equilibrium Model for Commodity Prices: Competitive and Monopolistic Markets∗

In this article, we develop an equilibrium model for storable commodity prices. The model is formulated as a stochastic dynamic control problem and considers two state variables the exogenous supply and the inventory. The inventory is a fully controllable endogenous variable. We assume that the uncertainty arises from the supply, which evolves as a Ornstein-Uhlenbeck stochastic process. This mo...

Monopolistic Price Flexibility and Social Welfare: the Linear Case

We explore the case for monopolistic price flexibility in a linear setting. With different marginal costs, by changing the production mix price differentiation can improve welfare and also aggregate consumer surplus even if total output does not increase (as in the linear case). This depends on the variability of cost and demand parameters, and on their correlation. We also show that the welfar...

Firms learning price in a monopolistic competition economic model

This paper aims to investigate the possibility for monopolistically competitive firms to set the price and the quantity of goods through a reinforcement learning approach. The model incorporates a set of firms that produce and sell differentiated goods in monopolistically competitive markets and households that supply different types of labor, purchase goods for consumption and hold money. The ...

Developing a new stochastic competitive model regarding inventory and price

Within the competition in today’s business environment, the design of supply chains becomes more complex than before. This paper deals with the retailer’s location problem when customers choose their vendors, and inventory costs have been considered for retailers. In a competitive location problem, price and location of facilities affect demands of customers; consequently, simultaneous optimiza...

Price Bundling in Competitive Markets: