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Competitive Pricing

Author

Listed:
  • Antonio Villar

    (Department of Economics, Universidad Pablo de Olavide)

Abstract

Competitive pricing is a pricing rule that combines two principles that are present in competitive markets. The profit principle (an action will be chosen only if it yields maximal payoffs), and the scarcity principle (markets make expensive those commodities that restrict production possibilities). It is shown that, under standard assumptions, these principles imply profit maximization at given prices. But also that they can be applied to economies with non-convex production sets (e.g. firms with S-shaped production functions). The chief properties of this pricing rule, as well as the existence and efficiency of the associated equilibria, are analyzed

Suggested Citation

  • Antonio Villar, 2007. "Competitive Pricing," Working Papers 07.08, Universidad Pablo de Olavide, Department of Economics.
    • Handle: RePEc:pab:wpaper:07.08
    as

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    File URL: http://www.upo.es/serv/bib/wps/econ0708.pdf
    File Function: First version, 2007
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    References listed on IDEAS

    as
    1. Peter J. Hammond & Antonio Villar, 1998. "Efficiency with Non‐Convexities: Extending the “Scandinavian Consensus” Approaches," Scandinavian Journal of Economics, Wiley Blackwell, vol. 100(1), pages 11-32, March.
    2. Bonnisseau, Jean-Marc & Cornet, Bernard, 1988. "Existence of equilibria when firms follow bounded losses pricing rules," Journal of Mathematical Economics, Elsevier, vol. 17(2-3), pages 119-147, April.
    3. Dehez, Pierre & Dreze, Jacques, 1988. "Distributive production sets and equilibria with increasing returns," Journal of Mathematical Economics, Elsevier, vol. 17(2-3), pages 231-248, April.
    4. Dierker, Egbert & Guesnerie, Roger & Neuefeind, Wilhelm, 1985. "General Equilibrium When Some Firms Follow Special Pricing Rules," Econometrica, Econometric Society, vol. 53(6), pages 1369-1393, November.
    5. Dierker, Egbert & Neuefeind, Wilhelm, 1988. "Quantity guided price setting," Journal of Mathematical Economics, Elsevier, vol. 17(2-3), pages 249-259, April.
    6. Donald A. Walker (ed.), 2000. "Equilibrium," Books, Edward Elgar Publishing, volume 0, number 1585, December.
    7. Dehez, Pierre & Dreze, Jacques, 1988. "Competitive equilibria with quantity-taking producers and increasing returns to scale," Journal of Mathematical Economics, Elsevier, vol. 17(2-3), pages 209-230, April.
    8. Moriguchi, Chiaki, 1996. "Two-part marginal cost pricing in a pure fixed cost economy," Journal of Mathematical Economics, Elsevier, vol. 26(3), pages 363-385.
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    Cited by:

    1. Antonio Villar Notario & Peter Hammond, 1998. "- Valuation Equlibrium Revisited," Working Papers. Serie AD 1998-24, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    2. Antonio Villar Notario, 2000. "On The Efficiency Of Market Equilibrium In Production Economies," Working Papers. Serie AD 2000-17, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).

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    More about this item

    Keywords

    non-convex production sets; competitive pricing rule; competitive pricing equilibrium.;
    All these keywords.

    JEL classification:

    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General

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