Planning Costs and Price Discrimination in Markets for Time-Specific Goods
Abstract/Contents
- Abstract
- When consumers have constant or non-existent planning costs firms can always achieve maximum profits with a single fixed price. However, when planning costs vary with consumers’ valuations a single fixed price is not always sufficient for profit maximization. In such cases it is optimal for the firm to provide an array of purchasing options. High valuation consumers will purchase with certainty at a high price while lower valuation consumers will opt for a lottery which gives some probability of being allowed to purchase at a discounted price and no opportunity to purchase otherwise. In general this type of mechanism may be difficult to implement, but in markets for time-specific goods any menu of lotteries can be realized by a descending price path with quantity restrictions at the discount prices.
Description
Type of resource | text |
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Date created | September 2006 |
Creators/Contributors
Author | Hegeman, John | |
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Primary advisor | Levin, Jonathan | |
Degree granting institution | Stanford University, Department of Economics |
Subjects
Subject | Stanford Department of Economics |
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Subject | prices |
Subject | valuations |
Subject | consumer |
Subject | markets |
Genre | Thesis |
Bibliographic information
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Preferred citation
- Preferred Citation
Hegeman, John. (2006). Planning Costs and Price Discrimination in Markets
for Time-Specific Goods. Stanford Digital Repository. Available at: https://purl.stanford.edu/nk783xc2984
Collection
Stanford University, Department of Economics, Honors Theses
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