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A note on dynamic monopoly pricing under consumption externalities

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  • Hashimoto, Kaito
  • Matsubayashi, Nobuo

Abstract

We analyze dynamic monopoly pricing under consumption externalities, focusing on pricing under negative externalities. We also attempt to generalize models in the previous literature, which encompass both negative and positive externalities, by incorporating a consumer’s discount factor for past sales as a parameter. Analyzing our model reveals oscillation as the optimal price path in the presence of negative externalities.

Suggested Citation

  • Hashimoto, Kaito & Matsubayashi, Nobuo, 2014. "A note on dynamic monopoly pricing under consumption externalities," Economics Letters, Elsevier, vol. 124(1), pages 1-8.
    • Handle: RePEc:eee:ecolet:v:124:y:2014:i:1:p:1-8
    DOI: 10.1016/j.econlet.2014.04.007
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    4. Zhang, Ren-Qian & Yi, Meng & Wang, Qi-Qi & Xiang, Chen, 2018. "Polynomial algorithm of inventory model with complete backordering and correlated demand caused by cross-selling," International Journal of Production Economics, Elsevier, vol. 199(C), pages 193-198.

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    More about this item

    Keywords

    Monopoly pricing; Consumption externalities; Snob effect; Congestion pricing;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies

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