|
|
|
|
Title: |
On the Dynamic Incentive of Price-Quality
Differentiation by a Monopolist Firm |
| Author: |
Wang, Gyu Ho |
| Author
Affiliation: |
Chung-Ang U |
| Source: |
International Economic Journal, Spring 2000, v. 14, no. 1, pp. 33-45 |
|
Publication Date: |
Spring 2000 |
|
Abstract: |
When consumers are heterogeneous 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. |
|
