A Cooperative Game Theory Model of Quantity Discounts

Rajeev Kohli and Heungsoo Park
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Rajeev Kohli: Joseph M. Katz Graduate School of Business, University of Pittsburgh, Pittsburgh, Pennsylvania 15260
Heungsoo Park: College of Business and Economics, Yonsei University, Seoul, Korea

Management Science, 1989, vol. 35, issue 6, 693-707

Abstract: Quantity discounts offered by a monopolist are considered in the context of a bargaining problem in which the buyer and the seller negotiate over the order quantity and the average unit price. All-units and incremental quantity discounts that permit transaction at a negotiated outcome are described. The effects of risk sensitivity and bargaining power on quantity discounts are discussed for alternative bargaining models.

Keywords: marketing: distribution; marketing: pricing; bargaining; inventory/production: EOQ (search for similar items in EconPapers)
Date: 1989
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:35:y:1989:i:6:p:693-707

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