Price and quality decisions of a service provider under heterogeneous demand
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Type :
Article
Publication Status :
Published
Access :
openAccess
Abstract
A monopolist service provider's quality and price decisions are analyzed in a vertically differentiated market where customers demand different quantities of a service. We find that depending on the relative sizes of the market segments and the difference in the valuations of different customers, the service provider may find it optimal to either offer a non-discriminating service or a discriminating service serving only high-valuation customers. The service provider never finds it optimal to serve the market segments that have low-valuation for quality when the discrimination strategy is optimal. © 2019 Bogazici Universitesi. All rights reserved.
Source :
Bogazici Journal
Date :
2019
Volume :
33
Issue :
2
Publisher :
Boğaziçi Üniversitesi
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