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| Volume 10, No. 1,
April 2011 |
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Second-Degree Monopoly
Wholesaler |
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with Variable Ordering Costs |
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| Uriel Spiegel |
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Department of Management, Bar-Ilan
University, Israel |
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and |
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Department of Economics,
University of Pennsylvania, U.S.A. |
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Tchai Tavor |
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Department of Economics,
Yisrael Valley College, Israel |
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| Abstract |
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Ordering costs are usually considered
as fixed costs. For the case of one seller and two identical buyers,
we examine ordering charges that are proportional to the number of
units ordered. We find that no extra profits will be generated,
neither for the producer nor for the retailers. Thus, proportional
ordering costs are not economically justified. |
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Key words:
retailers; ordering charges; excess demand; excess supply |
| JEL
classification:
C44; L12; L16; M11 |
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