The revenue maximization problem of service provider is considered and different pricing schemes to solve the above problem are implemented. The service provider can choose an apt pricing scheme subjected to limited resources, if he knows the utility function and identity of the user. The complete price differentiation can achieve a large revenue gain but has high implementation complexity. The...

We introduce product differentiation in the model of price competition with strictly convex costs in which firms have to supply all the forthcoming demand. We find that although a continuum of equilibria exists in a homogeneous product market, the competitive price equilibrium is the only robust one. Specifically, as long as the equilibrium correspondence is nonempty, the equilibrium price conv...

Abstract This paper sketches a model of product differentiation according to the hedonic hypothesis that is based on the theory of consumer behavior of Lancaster (1971). Lancaster suggested that utility is derived from the characteristics of the good and not the good itself. Thus, from the perception of the consumer, every characteristic has a price. This is the hedonic (or implicit) price. We ...

Consignment contracts have been widely employed in many industries. Under such contracts, items are sold at a retailer’s but the supplier retains the full ownership of the inventory until purchased by consumers; the supplier collects payment from the retailer based on actual units sold. We investigate how competition among retailers influences the supply chain decisions and profits under differ...

Price differentiation describes a marketing strategy to determine the price of goods on the basis of a potential customer’s attributes like location, financial status, possessions, or behavior. Several cases of online price differentiation have been revealed in recent years. For example, different pricing based on a user’s location was discovered for online office supply chain stores and there ...

The existing literaturewhich analyses the relationship between the product differentiation degree and the sustainability of a collusive agreement on price assumes that firms cannot price discriminate, and concludes that there is a negative relationship between the product differentiation degree and the critical discount factor. This paper, in contrast, assumes that firms are able to price discr...

A standard “solution” offered to the deleterious effects of all-out price competition is for firms to engage in differentiation strategies. This solution, however, depends critically on the inability of rivals to imitate a successful differentiation strategy. With imitation, we show how “Red Queen” pricing effects can arise: All firms have an incentive to vertically differentiate and increase m...