Interpretation of product differentiation in linear demand functions

2019 ◽  
pp. 267-285
Author(s):  
Sang-June Park
Keyword(s):  
Product Differentiation ◽  
Demand Functions ◽  
Linear Demand

Analysis on Third-Degree Price Discrimination in Oligopoly Market Based on Static Game Theory

2014 ◽  
Vol 912-914 ◽  
pp. 1865-1873
Author(s):  
Xing You Gao
Keyword(s):  
Price Discrimination ◽  
Weighted Average ◽  
Complete Information ◽  
Equilibrium Price ◽  
Total Revenue ◽  
Static Game ◽  
Demand Functions ◽  
Equilibrium Prices ◽  
Linear Demand ◽  
The Relationship

Equilibrium production, equilibrium price and equilibrium total revenue in the case of implementing third-degree price discrimination and unified pricing were analyzed under the condition of two oligopoly firms with 2 sub markets by complete information static game method, and the relationship between the three indexes of the two cases were studied. The results showed that, under the condition of linear demand functions of the two sub markets, the equilibrium output of unified pricing was equal to the equilibrium output of discriminative pricing; the equilibrium price of unified pricing was weighted average of the equilibrium prices of two sub markets while discriminative pricing; the equilibrium total revenue of unified pricing was less than the equilibrium total revenue of discriminative pricing.

scholarly journals Marginal Utility and Cournot Stability Under Market Entry

2021 ◽  
Vol 16 (1) ◽  
pp. 187-197
Author(s):  
Gerasimos Soldatos
Keyword(s):  
Market Entry ◽  
Marginal Utility ◽  
Mean Value ◽  
Mean Value Theorem ◽  
Demand Functions ◽  
Product Heterogeneity ◽  
Linear Demand ◽  
Rate Of Decline ◽  
Product Homogeneity ◽  
The Stability

Abstract This paper introduces into the discussion of the stability of quantity-oligopoly equilibrium, the role that the slope of the marginal utility curve and of market entry in shaping the equilibrium and its stability. It does so by considering inverse multivariate linear demand functions and the notion of stability related to multivariate mean value theorem. The equilibrium cluster of Cournot sellers is determined by the stability dictated by this theorem and the rate of decline of the marginal utility of the product under consideration. Strategic complementarity is found to be the case under product heterogeneity, while the strategic substitutability associated with product homogeneity, induces a modification of Cournot limit theorem.

A Class of Utility Functions Yielding Linear Demand Functions

1996 ◽  
Vol 40 (1) ◽  
pp. 20-23 ◽  
Author(s):  
Gershon Alperovich ◽  
Itzhak Weksler
Keyword(s):  
Utility Functions ◽  
Demand Functions ◽  
Linear Demand

Notes on Aggregation Criteria in Market Segmentation

1984 ◽  
Vol 21 (3) ◽  
pp. 332-335
Author(s):  
William Blozan ◽  
Paul Prabhaker
Keyword(s):  
Market Segmentation ◽  
Price Discrimination ◽  
Extreme Conditions ◽  
Clustering Techniques ◽  
Demand Functions ◽  
Marginal Costs ◽  
Linear Demand ◽  
Profit Maximizing ◽  
Theoretical Evidence

First, the authors seek to dispel any misunderstanding that standard price discrimination theory prescribes a profit-maximizing aggregation criterion. They argue that Tollefson and Lessig misinterpreted this theory, but prove that the latter authors’ unwarranted implication is justified in the case of linear demand functions and constant marginal costs. Second, the authors argue that the “theoretical evidence” presented by Tollefson and Lessig against using elasticities to cluster segments is, in fact, no evidence at all, and that their simulations may be valid only under extreme conditions. Finally, a new theorem is offered which provides some support for using clustering techniques to disaggregate markets.

A Pedagogical Note on Multitier Pricing Scheme

2018 ◽  
Vol 63 (2) ◽  
pp. 228-244
Author(s):  
Winston W. Chang ◽  
Tai-Liang Chen
Keyword(s):  
Graphical Representation ◽  
Jel Classification ◽  
Total Output ◽  
Marginal Revenue ◽  
Demand Functions ◽  
Pricing Scheme ◽  
Linear Demand ◽  
Revenue Function ◽  
The Individual ◽  
New Formula

This note derives a new formula for determining a monopolist’s optimal multitier pricing scheme for any given number of tiers. It further characterizes Gabor’s ( Review of Economic Studies) two-tier pari passu marginal revenue function to the [Formula: see text]-tier case. By introducing the individual tier’s marginal revenue and the pari passu marginal revenue in a linear demand case, this note provides a perceptive graphical representation of the optimal pricing scheme, revealing that all tiers’ outputs are equal, the last tier’s price is always higher than the marginal cost, and an increase in the number of tiers increases social welfare. In a class of nonlinear demand functions, it shows that starting from the first tier, the tiers’ outputs are monotonically increasing (decreasing) if the demand function is strictly convex (concave). It also shows that the equal-tier-output property preserves in the linear demand case with the total output fixed as a constraint. JEL Classification: D01, D21, D42, L12, L21

Product Differentiation and Consumer Surplus in the Microfinance Industry

2013 ◽  
Vol 13 (2) ◽  
pp. 991-1022 ◽  
Author(s):  
Darrell J. Glaser ◽  
Ahmed S. Rahman ◽  
Katherine A. Smith ◽  
Daniel W. Chan
Keyword(s):  
Product Differentiation ◽  
Structural Changes ◽  
Consumer Surplus ◽  
Set Covering ◽  
Price Setting ◽  
Microfinance Institutions ◽  
Price Equilibrium ◽  
Data Set ◽  
Demand Functions ◽  
Lending Institutions

Abstract During the last 15 years, high repayment rates of up to 96% have drawn many new lending institutions to the microfinance industry. While a decade ago, the industry was dominated primarily by monopolies ostensibly focused on social welfare, the current market is filled with various types of financial institutions offering a variety of lending arrangements. The goal of this article is to capture the degree to which consumers have benefitted from these structural changes within the microfinance industry. Using a Bertrand differentiated product framework, we model the price setting and demand functions of Microfinance Institutions (MFIs). With a 7 year panel data set covering over 70 countries, we empirically estimate parameters of the Nash price equilibrium and simulate the shape and structure of the underlying demand equation. We use simulated demand parameters to derive and compare measures of consumers’ surplus across regions and countries. Our research indicates that growth in the MFI industry has brought about declines in market concentration, and furthermore that each 0.01 unit change in the Hirschman–Herfindahl index correlates with a 2% increase in consumers’ surplus.

Sign in / Sign up

Export Citation Format

Share Document