Personalized prices and uncertainty in monopsony

Abstract

We analyze personalized pricing by a monopsonist facing a …nite number of ex ante identical, capacity constrained suppliers with privately known costs. When the distribution of costs is su¢ ciently smooth and regular, the buyer chooses to make the same o¤er to all suppliers, leading to a posted price. This price is lower than the classical monopsony price if the demand function is concave, and higher if the demand is convex. In the limit as the seller capacities tend to zero we obtain the classical monopsony price. Therefore, our model provides a decentralized microfoundation for monopsony. We gratefully acknowledge …nancial support from the ESRC

Brand image among the purchase decision determinants

“…Alternative reasons that affect the purchase decision is the perceived price (Wang et al, 2019;Junyi et al, 2018). Perceived price assesses the cost in terms of the expected benefits from supply consumption (Burguet & Sákovics, 2019;Verma et al, 2019).…”

“…In most cases, customers have the opportunity to choose from different offers, so the price will be one of the comparative indicators on which their purchasing decisions are based (Wang et al, 2019). Price had been consistently stated as a significant influencing factor in purchasing decisions (Burguet & Sákovics, 2019;Wang et al, 2019). If prices are low, the demand for products increases.…”

“…When consumers make purchases, prices are always stated as a significant influencing factor (Junyi et al, 2018). Besides the perceived price, brand image can also become a determinant for purchase decisions (Burguet & Sákovics, 2019).…”