Consumer Strategies Limiting the Monopolist's Power: Multiple and Joint Purchases

Ingela Alger

RAND Journal of Economics, 1999, vol. 30, issue 4, 736-757

Abstract: I characterize the menu of bundles (price-quantity combinations) offered by a monopolist when consumers can buy several bundles, share bundles with others, or do both, in a two-type setting. I find that although perfect arbitrage prevents any price discrimination, partial arbitrage in the form of multiple or joint purchases may actually lead to more pronounced price discrimination than when consumers can only pick one single bundle. Further, clear predictions emerge for the price pattern, contrasting with the existing literature: with multiple purchases only, the firm offers strict quantity discounts; with joint purchase only, discounts are infeasible.

Date: 1999
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