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Spatial monopoly pricing under non-constant marginal costs

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  • Marten Graubner

    (Leibniz Institute of Agricultural Development in Transition Economies (IAMO))

Abstract

The firm’s price policy decision is a central issue in spatial economics. Previous results show, e.g., that the specification of consumers’ demand functions is pivotal but mostly mill and uniform pricing are compared in a monopoly setting with constant marginal costs. The results in this paper highlight that some conclusions of prior work do not hold if the monopolist operates under non-constant marginal production costs. For instance, the optimal price is no longer independent of transport costs, and the welfare ranking of mill and uniform pricing also depends on the shape of the cost function.

Suggested Citation

  • Marten Graubner, 2020. "Spatial monopoly pricing under non-constant marginal costs," Letters in Spatial and Resource Sciences, Springer, vol. 13(1), pages 81-97, April.
    • Handle: RePEc:spr:lsprsc:v:13:y:2020:i:1:d:10.1007_s12076-020-00246-1
    DOI: 10.1007/s12076-020-00246-1
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    References listed on IDEAS

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    More about this item

    Keywords

    Spatial pricing; Price discrimination; Monopoly;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis

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