Monopoly Linear and Nonlinear Pricing
8 Pages Posted: 10 Apr 2005
Date Written: January 2005
Abstract
This pedagogical note explains how the same basic principle can be applied to explain the profit-maximizing behavior of a monopolist under both linear and nonlinear pricing by introducing an average price function. It is shown that optimal conditions under nonlinear pricing are similar to that of linear pricing. These conditions can be explained through a simple graphical exposition. The optimal conditions under monopolistic linear and nonlinear price discriminations are also similar.
JEL Classification: D42, L12
Suggested Citation: Suggested Citation
Nahata, Babu, Monopoly Linear and Nonlinear Pricing (January 2005). Available at SSRN: https://ssrn.com/abstract=687467 or http://dx.doi.org/10.2139/ssrn.687467
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