Capacity Pricing.

Abstract

A central issue in price theory is how to set prices for services that require the seller to incur a setup cost. In this paper we adopt a novel approach using nonlinear pricing, and address the special case of a monopoly. Restrictive assumptions are imposed on the cost and demand functions, but these enable a complete characterization of the optimal pricing policy. The problem we address is formally one of nonlinear pricing for a multiproduct monopoly, which has been studied by Mirman and Sibley 1980. However, their analysis does not recognize the crucial role of the discontinuity in the cost function and its ramifications for the optimal pricing policy. (Author)

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Document Details

Document Type
Technical Report
Publication Date
Oct 01, 1982
Accession Number
ADA123690

Entities

People

  • Robert Wilson
  • Shmuel Oren
  • Stephen M. Smith

Organizations

  • Stanford University

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  • C4I

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  • Boundaries
  • Commerce
  • Decision Theory
  • Distribution Functions
  • Economics
  • Electric Power
  • Electronic Mail
  • Equations
  • Factor Analysis
  • Heterogeneity
  • Intervals
  • Military Research
  • Money
  • Rate Of Consumption
  • Social Sciences
  • Two Dimensional
  • United States

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  • Educational Psychology
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