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Mariano Runco
''Retail Pricing and Clearance Sales: The Multidimensional Case''
( 2012, Vol. 32 No.1 )
In this paper I generalize Lazear's model (1986) of retail pricing to the case of a monopolist selling two goods to a potential buyer with unknown valuations. The optimal prices and profit levels are computed for different distributions of valuations using Monte-Carlo simulations. Preliminary results show that the decrease in profits of the suboptimal pure bundling strategy (where the firm has to set only 2 prices) in both periods is extremely small relative to the profits of the optimal mixed bundling strategy (where the firm has to set 6 prices).
JEL: D4 - Market Structure and Pricing: General
Manuscript Received : Sep 11 2011 Manuscript Accepted : Jan 25 2012

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