POSTPONED HOLDBACK PRICING, PROFIT AND CONSUMER SURPLUS

Yigal Gerchak ()
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Yigal Gerchak: Department of Industrial Engineering, Tel-Aviv University, Ramat Aviv, Tel Aviv 69978, Israel

Asia-Pacific Journal of Operational Research (APJOR), 2012, vol. 29, issue 01, 1-8

Abstract: Operational decisions of a monopolist firm affect expected social welfare, a fact typically ignored by OM models. Specifically, the price selected directly affects the consumer surplus, which has to be added to firm's profit to find the social welfare. We assume an uncertain, price-sensitive, demand. Production capacity is selected at the outset, but the price is chosen after demand uncertainty realized itself. This model was proposed by Van Mieghem and Dada (1999), but we extend it to other demand functions. We then compute the resulting consumer surplus. Finally, we consider such issues in a decentralized supply chain with revenue sharing.

Keywords: Pricing; lot-sizing; consumer surplus (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:wsi:apjorx:v:29:y:2012:i:01:n:s0217595912400076

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DOI: 10.1142/S0217595912400076

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