Competition and Multiplant Monopoly with Spatial Nonlinear Pricing

Spulber, Daniel F.

doi:10.2307/2526207

Cited by 19 publications

(7 citation statements)

References 8 publications

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“…Volume discounts offer different prices (and services) to different segments and, consequently, by definition, are a form of price discrimination taking the form of nonlinear pricing (e.g., see Spulber 1984).…”

Section: Customizationmentioning

confidence: 99%

Brand Loyalty Programs: Are They Shams?

2005

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Brand loyalty and the more modern topics of computing customer lifetime value and structuring loyalty programs remain the focal point for a remarkable number of research articles. At first, this research appears consistent with firm practices. However, close scrutiny reveals disaffirming evidence. Many current so-called loyalty programs appear unrelated to the cultivation of customer brand loyalty and the creation of customer assets. True investments are up-front expenditures that produce much greater future returns. In contrast, many so-called loyalty programs are shams because they produce liabilities (e.g., promises of future rewards or deferred rebates) rather than assets. These programs produce short-term revenue from customers while producing substantial future obligations to those customers. Rather than showing trust by committing to the customer, the firm asks the customer to trust the firm—that is, trust that future rewards are indeed forthcoming. The entire idea is antithetical to the concept of a customer asset. Many modern loyalty programs resemble old-fashioned trading stamps or deferred rebates that promise future benefits for current patronage. A true loyalty program invests in the customer (e.g., provides free up-front training, allows familiarization or customization) with the expectation of greater future revenue. Alternative motives for extant programs are discussed.so-called loyalty programs, reward programs, customer assets, customer liabilities, deferred rebates, customer lifetime value

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Section: Customizationmentioning

confidence: 99%

Brand Loyalty Programs: Are They Shams?

2005

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“…(2). In particular, Spulber (1981) and Maskin and Riley (1984) have shown that the firm offers quantity discounts and a different quantity-outlay pair to each type of consumer who buys from the firm. Furthermore, the optimal quantity schedule ql* (x) is independent of 2.…”

Section: ) = C + Tx)mentioning

confidence: 99%

“…A monopolist who cannot identify individual consumers' demand curves must design a nonlinear price schedule that satisfies incentive compatibility constraints in order to induce each consumer to select the appropriate option. In this setting, Spulber (1981) shows that a monopolist who does not observe consumer locations can implement spatial price discrimination by offering quantity discounts. Maskin and Riley (1984) consider the general case of a monopolist facing incomplete information about consumer types.…”

Section: Introductionmentioning

confidence: 99%

Nonlinear pricing in spatial oligopoly

Hamilton

1996

Economic Design

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“…In this analysis second-degree price discrimination leads to a greater number of firms (more variety) than linear pricing. See also Spulber (1984) and Hamilton and Thisse (1997). 11 They also study the continuous types case -Villas-Boas and Schmidt-Mohr (1997).…”

Section: Introductionmentioning

confidence: 99%

Delivered Versus Mill Nonlinear Pricing in Free Entry Markets

Jorge¹,

Pires

2004

SSRN Journal

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This paper discusses a model where consumers simultaneously differ according to one unobservable (preference for quality) and one observable characteristic (location). In these circumstances nonlinear prices arise in equilibrium. The main question addressed in this work is whether firms should be allowed to practise different nonlinear prices at each location (delivered nonlinear pricing) or should be forced to set an unique nonlinear contract (mill nonlinear pricing). Assuming that firms can costless relocate, we show that the free entry long-run number of firms may be either smaller, equal, or higher under delivered nonlinear pricing. In addition, we show that delivered nonlinear pricing yields in the long-run higher welfare and, consequently, our results support the view that discriminatory nonlinear pricing should not be prohibited.

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Competition and Multiplant Monopoly with Spatial Nonlinear Pricing

Cited by 19 publications

References 8 publications

Brand Loyalty Programs: Are They Shams?

Brand Loyalty Programs: Are They Shams?

Nonlinear pricing in spatial oligopoly

Delivered Versus Mill Nonlinear Pricing in Free Entry Markets

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