Second-Degree Monopoly Wholesaler with Variable Ordering Costs

Uriel Spiegel and Tchai Tavor ()
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Uriel Spiegel: Department of Management, Bar-Ilan University, Israel and Department of Economics, University of Pennsylvania, U.S.A.

International Journal of Business and Economics, 2011, vol. 10, issue 1, 45-59

Abstract: Ordering costs are usually considered as fixed costs. For the case of one seller and two identical buyers, we examine ordering charges that are proportional to the number of units ordered. We find that no extra profits will be generated, neither for the producer nor for the retailers. Thus, proportional ordering costs are not economically justified.

Keywords: retailers; ordering charges; excess demand; excess supply (search for similar items in EconPapers)
JEL-codes: C44 L12 L16 M11 (search for similar items in EconPapers)
Date: 2011
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