Title: On The Dynamic Incentive of Price-Quality Differentiation By A Monopolist Firm
Abstract: When consumers are theterogeneous in their preferences about the quality of a product, a monopolist firm can take advantage of this heterogeneity, thereby, increase the profit by offering different price-quality pairs. This business practice is called the second degree price discrimination or non-linear pricing. This paper extends the static non-linear pricing problem into the dynamic one where the monopolist firm cannot precommit in advance. The main result is that the dynamic non-linear pricing outcome is the same as the static non-linear pricing outcome so that additional opportunities to transact neither benefits nor hurts the monopolist firm. [L12]
Publication Year: 2000
Publication Date: 2000-03-01
Language: en
Type: article
Indexed In: ['crossref']
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Cited By Count: 1
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