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Pricing stategies with costly customer arbitrage


Sibly, H, Pricing stategies with costly customer arbitrage, Review of Industrial Organization, 50, (3) pp. 345-366. ISSN 0889-938X (2017) [Refereed Article]

Copyright Statement

Copyright 2016 Springer Science+Business Media New York

DOI: doi:10.1007/s11151-016-9533-0


A monopolist's ability to conduct non-linear pricing is limited because customers can, at a cost, unbundle bundled output. Three pricing strategies are available to a firm: (1) a separating strategy; (2) a pooling strategy; and (3) an exclusion strategy. Each is optimal for some set of unbundling cost and distribution of customer types. The optimal pricing strategies are contrasted with the well studied benchmark cases, in which unbundling costs are either zero or arbitrarily high. It is shown that it is not always possible to extrapolate the conclusions from the benchmark cases with respect to pricing, profitability, consumer surplus or efficiency.

Item Details

Item Type:Refereed Article
Keywords:Non-linear pricing;Pricing strategies;Unbundling
Research Division:Economics
Research Group:Economic theory
Research Field:Economic theory not elsewhere classified
Objective Division:Economic Framework
Objective Group:Macroeconomics
Objective Field:Macroeconomics not elsewhere classified
UTAS Author:Sibly, H (Dr Hugh Sibly)
ID Code:110686
Year Published:2017 (online first 2016)
Deposited By:TSBE
Deposited On:2016-08-09
Last Modified:2022-08-18

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