Nonlinear pricing in spatial oligopoly

Jonathan Hamilton and Jacques Thisse

No 1996066, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: A model of duopoly competition in nonlinear pricing when firms are imperfectly informed about consumer locations is analyzed. A continuum of consumers purchase a variable amount of a product from one of two firms located at the endpoints of the market. At the Nash equilibrium in quantity-outlay schedules, consumers buy the same quantities as they would from the same firm if it were a monopolist facing the same informational asymmetries, but they receive greater surplus. Hence, no efficiency gains result from competition. If consumers have the option to reveal their locations and have the firms deliver the goods, all consumers choose to reveal their locations in equilibrium. Thus, the inefficiencies from information asymmetries may not arise because firms can deliver the good to consumers. In contrast, with a monopoly seller, consumers have no incentives to reveal their locations.

Keywords: competing; principals; -nonlinear; pricing; -; spatial; competition (search for similar items in EconPapers)
JEL-codes: C72 D43 D82 (search for similar items in EconPapers)
Date: 1996-12-01
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Related works:
Working Paper: Nonlinear pricing in spatial oligopoly (1997)
Journal Article: Nonlinear pricing in spatial oligopoly (1996)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:1996066

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