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Pricing and production in consumer markets where sales depend on production

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  • Farm, Ante

Abstract

This paper deals with consumer markets where sales depend on production. Assuming that a firm’s sale is proportional to its production, it shows that a price leader will set a price which maximizes its industry’s revenues in markets with many small firms, independent of their cost functions.

Suggested Citation

  • Farm, Ante, 2017. "Pricing and production in consumer markets where sales depend on production," Economics Letters, Elsevier, vol. 154(C), pages 17-19.
    • Handle: RePEc:eee:ecolet:v:154:y:2017:i:c:p:17-19
    DOI: 10.1016/j.econlet.2017.02.021
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    References listed on IDEAS

    as
    1. Ante Farm, 2017. "Pricing and price competition in consumer markets," Journal of Economics, Springer, vol. 120(2), pages 119-133, March.
    2. Farm, Ante, 1988. "Cooperative oligopolistic pricing," European Journal of Political Economy, Elsevier, vol. 4(1), pages 13-28.
    3. George J. Stigler, 1947. "The Kinky Oligopoly Demand Curve and Rigid Prices," Journal of Political Economy, University of Chicago Press, vol. 55(5), pages 432-432.
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    Cited by:

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    More about this item

    Keywords

    Pricing; Consumer markets; Price leadership; Proportional rationing;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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