Journal of Scientific Papers

ECONOMICS & SOCIOLOGY


© CSR, 2008-2015
ISSN 2071-789X



Directory of Open Access Journals (DOAJ)


Strike Plagiarism

Partners
  • General Founder and Publisher:


    Centre of Sociological Research

  • Publishing Partners:

     
     
    University of Szczecin (Poland)


    Mykolas Romeris University (Lithuania)

     

     
     
    Alexander Dubcek University of Trencín, Faculty of Social and Economic Relations (Slovak Republic)



     
    University of Entrepreneurship and Law, (Czech Republic)

     

  • Membership:


    American Sociological Association


    European Sociological Association


    World Economics Association (WEA)

     


    CrossRef

     


Price Discount for the Increased Order as a Cooperative Game in Bilateral Monopoly

Vol. 8, No 3, 2015

Sławomir Kalinowski

 

Department of Microeconomics, The Poznań University of Economics,

Poznań, Poland,

 

slawomir.kalinowski@ue.poznan.pl

PRICE DISCOUNT

FOR THE INCREASED ORDER AS A COOPERATIVE GAME IN BILATERAL MONOPOLY

 

 

Abstract. The bilateral monopoly is the market structure that joins sole producer of the good and the monopolistic distributor of it. There are two possible solutions to the determination of price and quantity traded between buyer and seller. First, non-cooperative one, is the price leadership of the seller producing the Bowley equilibrium. Second is cooperative solution maximizing joint profits with undetermined price. The price level shares the sum of profits between buyer and seller. The article applies the Nash bargaining solution to determine the agreement point in two stage cooperation. The aim of the study is to investigate, what will be the cooperative solution if the buyer and seller achieve the Bowley equilibrium point first and then negotiate cooperative set of the price discount and the quantity traded growth rate. The outcome of the model is the asymmetric division of the maximized joint profit. Thanks to his price leadership, the share of the seller is significantly higher than for the one stage cooperation.

 

Received: April, 2015

1st Revision: July, 2015

Accepted: August, 2015

 

DOI: 10.14254/2071-789X.2015/8-3/8

JEL Classification: C71, C78, L11

Keywords: bilateral  monopoly, Nash bargaining solution, cooperative games, Bowley equilibrium.