DP5166 On the Uniqueness of Optimal Prices Set by Monopolistic Sellers

Author(s): Gerard van den Berg
Publication Date: August 2005
Keyword(s): auction, hazard price, hazard rate, local maxima, minimum price, monopoly, quantity discount, regularity, reservation price
JEL(s): D42, D44, L12, L42
Programme Areas: Industrial Organization
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=5166

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.