Three Principles of Competitive Nonlinear Pricing
Author: Frank H. Page
Publisher:
Published: 2001
Total Pages: 0
ISBN-13:
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Nonlinear Pricing
Author: Robert B. Wilson
Publisher: Oxford University Press, USA
Published: 1993
Total Pages: 446
ISBN-13: 9780195115826
DOWNLOAD EBOOKWhat do phone rates, frequent flyer programs, and railroad tariffs all have in common? They are all examples of nonlinear pricing. Pricing is nonlinear when it is not strictly proportional to the quantity purchased. The Electric Power Research Institute has commissioned Robert Wilson to review the various facets of nonlinear pricing. The work starts with a general non-mathematical discussion, followed by a more technical presentation intended for readers with a fairly advanced background. Thorough and detailed, this study has ample examples of case studies from a variety of industries.
Competitive Nonlinear Pricing Under Adverse Selection
Author: Andrea Attar
Publisher:
Published: 2021
Total Pages:
ISBN-13:
DOWNLOAD EBOOKOn Competitive Nonlinear Pricing
Author: Andrea Attardi
Publisher:
Published: 2015
Total Pages: 46
ISBN-13:
DOWNLOAD EBOOKMany financial markets rely on a discriminatory limit-order book to balance supply and demand. We study these markets in a static model in which uninformed market makers compete in nonlinear tariffs to trade with an informed insider, as in Glosten (1994), Biais, Martimort, and Rochet (2000), and Back and Baruch (2013). We analyze the case where tariffs are unconstrained and the case where tariffs are restricted to be convex. In both cases, we show that pure-strategy equilibrium tariffs must be linear and, moreover, that such equilibria only exist under exceptional circumstances. These results cast doubt on the stability of even well-organized financial markets.
An Empirical Analysis of Competitive Nonlinear Pricing
Author: Gaurab Aryal
Publisher:
Published: 2019
Total Pages: 42
ISBN-13:
DOWNLOAD EBOOKWe estimate a model of competitive nonlinear pricing with multidimensional preference heterogeneity using individual level data on advertisements bought by local businesses (e.g., doctors, electricians) from two Yellow Page Directories in one U.S. city-market. Variation in individual choices and payments allow us to identify the joint density of preferences, marginal costs of publishing and common utility parameters. Our estimates suggest substantial welfare loss due to asymmetric information. Comparing duopoly outcomes with (counterfactual) monopoly outcomes, we find that with less competition (i) producer surplus increases substantially; (ii) more “low-type” consumers are excluded; (iii) product variety increases, but benefits accrue only to the “high-type” consumers; (iv) total consumer surplus decreases; (v) but its distribution, across consumers, does not change.
Competitive Nonlinear Pricing
Author: Jean-Charles Rochet
Publisher:
Published: 2014
Total Pages: 13
ISBN-13:
DOWNLOAD EBOOKWe study competitive nonlinear pricing in a model involving simultaneously horizontal and vertical product differentiation. It is a particular case of a more general model of optimal contracting with uncertain participation that we study elsewhere (Rochet-Stole (1997)).
Competitive Nonlinear Pricing and Contract Variety
Author: Jian Shen
Publisher:
Published: 2016
Total Pages: 0
ISBN-13:
DOWNLOAD EBOOKWe analyze markets with both horizontally and vertically differentiated products under both monopoly and duopoly. In the base model with two consumer types, we identify conditions under which entry prompts an incumbent to expand or contract its low end of the product line. Our analysis offers a novel explanation for the widespread use of 'fighting brands' and 'product line pruning.' We also extend our analysis to asymmetric firms and three types of consumers and show that depending on the specific environment, entry may lead the incumbent to expand or contract the middle range of its product line (middle contracts). Our results are mainly driven by interactions between horizontal differentiation (competition) and vertical screening of consumers.
Three Principles of Competitive Nonlinear Pricing
Author:
Publisher:
Published:
Total Pages:
ISBN-13:
DOWNLOAD EBOOKThe Department of Economics at the University of Warwick presents the full text of the research paper entitled "Three Principles of Competitive Nonlinear Pricing," by Frank H. Page, Jr. and Paulo K. Monteiro that was published in May 2001. The paper is in PDF format. The authors discuss nonlinear pricing games and Nash equilibrium, the competitive taxation principle, the delegation principle, and the competitive revelation principle.
Implementation of Competitive Nonlinear Pricing
Author: Sissel Jensen
Publisher:
Published: 2006
Total Pages: 0
ISBN-13:
DOWNLOAD EBOOKThe paper studies how the optimal nonlinear quantity-payment allocation can be truthfully implemented by optional tariffs in a differentiated goods duopoly. Consumers choose from a menu of tariffs and are subsequently billed according to this. We find that implementation by simple two part tariffs may not be a feasible strategy in a duopoly because the optimal nonlinear tariff exhibits a convexity for lower quantities. We show that the optimal outcome can be implemented if the firms can use two part tariffs with inclusive consumption. The fixed fee includes a free consumption allowance, whereas subsequent consumption is charged according to a steep unit price. That way the firm is able to secure voluntary participation without violating the incentive constraint. The paper show some examples from the telecommunications industry where firms offer two part tariffs with free call minutes to low demand segments.
Nonlinear Pricing Strategies and Competitive Conditions in the Airline Industry
Author: Manuel A. Hernandez
Publisher:
Published: 2014
Total Pages: 0
ISBN-13:
DOWNLOAD EBOOKThis paper empirically examines the effect of competitive conditions on nonlinear pricing strategies in the airline industry. We use a unique data set to analyze the impact of concentration and the competitive pressures generated by Southwest and other low cost carriers on the relative prices within a menu of fares. The menu orders tickets by quality based upon cabin and ticket restrictions. We analyze the ratio of fares charged for various qualities within the menu to the fares charged for the lowest quality nonrefundable, restricted tickets. We observe a fare compression for only the highest fares on only the most concentrated (i.e., monopoly) routes. This result is something of a puzzle given a monopolist's market power. We find, however, that actual and potential competition from Southwest reduces low end fares and generally leads to substantial fare compression throughout the fare menu.
