The Second-Degree Price Discrimination of m Firms with n Demand Intervals Pricing Based on Cournot Model

Abstract:

Under the condition of linear demand function, the distribution law of equilibrium segment points of firms enforcing second-degree price discrimination to maximize respective revenues is analyzed in the case of m firms with n intervals pricing by using complete information static game theory. This is a promotion for two firms pricing with n segment intervals and m firms pricing with two segment intervals. The results show that: when m firms divide demand to enforce second-degree price discrimination, the necessary condition of revenue maximization is to divide demand into some intervals and let the length of each interval become geometric series, whose common ratio is 1 / m. The unified formula of equilibrium production, equilibrium price and market equilibrium total revenue of all four kinds of markets under the condition of second-degree price discrimination are presented in the most general sense, further more, the nature of which are analyzed in detail.

• Periodical: Advanced Materials Research (Volumes 971-973)
• Pages: 2432-2441
• DOI: https://doi.org/10.4028/www.scientific.net/AMR.971-973.2432
• Online since: June 2014
• Authors: Xing You Gao*
• Keywords: Complete Information Static Game, Cournot Model, Linear Demand, Second-Degree Price Discrimination

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