Monopoly Linear and Nonlinear Pricing

8 Pages Posted: 10 Apr 2005

See all articles by Babu Nahata

Babu Nahata

University of Louisville - College of Business - Department of Economics

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

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

Babu Nahata (Contact Author)

University of Louisville - College of Business - Department of Economics ( email )

Louisville, KY 40292
United States
502-852-4864 (Phone)

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