On the Uniqueness of Optimal Prices Set by Monopolistic Sellers
16 Pages Posted: 18 Aug 2005
Date Written: August 2005
Abstract
This paper considers price determination by monopolistic sellers who know the distribution of valuations among the potential buyers. We derive a novel condition under which the optimal price set by the monopolist is unique. In many settings, this condition is easy to interpret, and it is valid for a very wide range of distributions of valuations. The results carry over to the optimal minimum price in independent private value auctions. In addition, they can be fruitfully applied in the analysis of quantity discount price policies.
Keywords: Monopoly, auction, regularity, minimum price, hazard price, hazard rate, quantity discount, reservation price, local maxima
JEL Classification: D42, D44, L12, L42
Suggested Citation: Suggested Citation