On the Uniqueness of Optimal Prices Set by Monopolistic Sellers

16 Pages Posted: 18 Aug 2005

See all articles by Gerard J. van den Berg

Gerard J. van den Berg

University of Groningen; VU University Amsterdam - Department of Economics; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics; Tinbergen Institute

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

van den Berg, Gerard J., On the Uniqueness of Optimal Prices Set by Monopolistic Sellers (August 2005). CEPR Discussion Paper No. 5166, Available at SSRN: https://ssrn.com/abstract=785925

Gerard J. Van den Berg (Contact Author)

University of Groningen ( email )

P.O. Box 800
9700 AH Groningen, Groningen 9700 AV
Netherlands

VU University Amsterdam - Department of Economics ( email )

De Boelelaan 1105
1081 HV Amsterdam
Netherlands
+31 20 444 6132 (Phone)
+32 20 444 6020 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Tinbergen Institute

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

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