We consider a monopoly producing a good whose demand grows over time. Whatever the price policy which is adopted, the monopolist invests in order to meet the resulting demand growth. She can only invest in indivisible factory units. We identify the optimal price policy, and the ensuing optimal sequence of investment time points the monopoly selects through time. We show that this sequence satisfies the constant cycle pro
Monopoly Pricing over Time and the Timing of Investments / Tarola, Ornella. - In: TOPICS IN THEORETICAL ECONOMICS. - ISSN 1534-598X. - 6:1(2006), pp. 1-17. [10.2202/1534-598x.1263]
Monopoly Pricing over Time and the Timing of Investments
TAROLA, Ornella
2006
Abstract
We consider a monopoly producing a good whose demand grows over time. Whatever the price policy which is adopted, the monopolist invests in order to meet the resulting demand growth. She can only invest in indivisible factory units. We identify the optimal price policy, and the ensuing optimal sequence of investment time points the monopoly selects through time. We show that this sequence satisfies the constant cycle proFile allegati a questo prodotto
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