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Nonlinear Pricing of Storable Goods

Igal Hendel, Alessandro Lizzeri and Nikita Roketskiy ()

American Economic Journal: Microeconomics, 2014, vol. 6, issue 3, 1-34

Abstract: This paper develops a model of nonlinear pricing of storable goods. We show that storability imposes novel constraints on a monopolist's ability to extract surplus. We then show that the attempt to relax these constraints can generate cyclical patterns in pricing and sales, even when consumers are homogeneous. Thus, the model provides a novel explanation for sales that does not rely on discriminating heterogeneous consumers. Enriching the model to allow for buyer heterogeneity in storage technology, delivers the prediction that larger bundles are more likely to be on sale.

JEL-codes: D11 D42 L12 (search for similar items in EconPapers)
Date: 2014
Note: DOI: 10.1257/mic.6.3.1
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American Economic Journal: Microeconomics is currently edited by Johannes Hörner

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Handle: RePEc:aea:aejmic:v:6:y:2014:i:3:p:1-34