Monopolists and viscous demand
نویسندگان
چکیده
We characterize the optimal dynamic price policy of a monopolist who faces “viscous” demand for its services. Demand is viscous if it adjusts relatively slowly to price changes. We show that with the optimal policy the monopolist stops short of achieving 100% market penetration, even when all of the consumers have the same long-run willingness to pay for the service. Furthermore, for certain parameter values in the model, the price policy requires rapid oscillations of the price path. 2003 Elsevier Inc. All rights reserved. JEL classification: C61; D11; D42
منابع مشابه
Viscous demand
In many markets, demand adjusts slowly to changes in prices, i.e., demand is “viscous.” For such a market, the time path of a firm’s prices acquires added significance, compared with the case of instantaneous demand response. In this paper I explore some problems in strategic dynamic pricing of a service, in the presence of viscous demand, for simple models of a monopoly and a duopoly.
متن کاملImperfect competition with complements and substitutes
I study price competition in settings where end products are combinations of components supplied by different monopolists, nesting standard models of perfect complements and imperfect substitutes. I show sufficient conditions for a discrete-choice demand system to yield demand for each product which is logconcave in price, and has log-increasing differences in own and another product’s price, l...
متن کاملQuality choice and vertical integration
We show that, despite coordination in the quality level of the components that they provide, independent vertically-related (disintegrated) monopolists will provide products of lower quality level than a sole integrated monopolist. Further, the integrated monopolist achieves higher market coverage, higher consumer surplus, and higher profits. We establish these results for any distribution of p...
متن کاملHow Do Market Structures Affect Decisions on Vertical Integration/separation?
We provide a simple model to investigate decisions on vertical integration/separation. The key feature of this model is that more than one input is required for the final products of the local downstream monopolists. Depending on their cost structure, downstream firms’ decisions on vertical separation can be both strategic complements and strategic substitutes. As a result, the equilibrium numb...
متن کاملSpatial Competition in Retail Markets: Movie Theaters.∗
Retail markets are extremely important, but economists have few practical tools for analyzing the way dispersed buyers and sellers affect the properties of markets. In this paper, I develop an econometric model of retail demand, a model in which products are location specific and consumers have preferences over both geographic and other product characteristics. I show how to incorporate data on...
متن کاملذخیره در منابع من
با ذخیره ی این منبع در منابع من، دسترسی به آن را برای استفاده های بعدی آسان تر کنید
برای دانلود متن کامل این مقاله و بیش از 32 میلیون مقاله دیگر ابتدا ثبت نام کنید
ثبت ناماگر عضو سایت هستید لطفا وارد حساب کاربری خود شوید
ورودعنوان ژورنال:
- Games and Economic Behavior
دوره 45 شماره
صفحات -
تاریخ انتشار 2003