Rajeev Kohli

A Cooperative Game-Theory Model for Quantity Discounts

Coauthor(s): Heungsoo Park.

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Abstract:
Quantity discounts offered by a monopolist are considered in the context of a bargaining problem in which the buyer and seller negotiate over the order quantity and the average unit price. All-units and incremental quantity discounts that permit transactions at a negotiated outcome are described. The effect of risk sensitivity and bargaining power on quantity discounts are discussed for alternative bargaining models.

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