MONOPOLY PRICING

Monopoly pricing is examined in a general framework with an unknown population distribution of consumer characteristics, downward-sloping, multi-unit consumer demand, and increasing marginal cost. Reference point pricing is introduced and is shown to implement the profit-maximizing allocation. Nonlinear pricing is shown to be approximately optimal for the monopolist as the number of consumers gets large. Journal of Economic Literature Classification Numbers: D42, D82, L1. © 1993 Academic Press. All rights reserved.