Nonlinear Pricing and Oligopoly

  title={Nonlinear Pricing and Oligopoly},
  author={Lars Stole},
We consider the general problem of price discrimination with nonlinear pricing in an oligopoly setting where firms are spatially differentiated. We characterize the nature of optimal pricing schedules which in turn depends importantly upon the type of private information which the customer possesses – either horizontal uncertainty regarding brand preference or vertical uncertainty regarding quality preference. We show that as competition increases, the resulting quality distortions decrease, as… CONTINUE READING
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