The optimal auction : a mechanism for optimal third-degree price discrimination

Article Abstract:

Auctions are one of several tools used in a modern economy for the allocation of goods. Optimal auction is one type of this tool wherein a monopolist could choose to exercise third-degree price discrimination against the bidders. In this mechanism, the expected marginal revenue corresponds to the total of the expected marginal revenues of the winning bidders. A different approach on the intepretation of the price discrimination problem showed that one way to practice price discrimination is by using the optimal auction.

Monopolies, Auctions, Price discrimination

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Uncertain contestability

Article Abstract:

A single-period model is used to demonstrate the effects of potential entry of firms within the context of uncertainty. In line with the contestability theory, an equilibrium is arrived at even without the potential entry becoming an actual one. The incumbent or first-mover firm has to adopt a pricing policy that would not encourage entry otherwise it gets displaced by the new firm that has more attractive prices.

Industrial organization, Uncertainty

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Contestability reconsidered: the meaning of market exit costs

Article Abstract:

Market exit costs proved to be beneficial to market stability. Consideration of contestability theory revealed that a market with free entry and costless exit is highly receptive to hit-and-run entrants. With market exit costs, the effectiveness of potential competition is enhanced. Market exit costs also serve as essential condition for any untoward effect of an entry threat.

Economics, Research and Development in the Social Sciences and Humanities, Capital market, Capital markets, Trade policy, Commercial policy

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