TY - JOUR
T1 - Simultaneous price and quantity determination in a joint profit maximizing bilateral monopoly under dynamic optimization
AU - Devadoss, Stephen
AU - Cooper, Kevin
N1 - Funding Information:
The authors are grateful to the Faculty of Engineering, University of Malaya and Daffodil International University for their financial support. The authors are also thankful to the Management of Textile research Laboratory, APS Group Bangladesh for providing the laboratory facilities for this research work.
PY - 2000/3
Y1 - 2000/3
N2 - A long standing controversial issue in the literature surrounding the bilateral monopoly is the determinacy of equilibrium price and quantity when the seller and buyer maximize their joint profits. This controversy led to incorrect presentation of bilateral monopoly solutions in the literature. In this study, we employ a dynamic optimization model to simultaneously determine the equilibrium price and quantity transacted between the buyer and seller. We also show that for the bilateral monopoly to achieve equilibrium they must transact the intermediate product at the hint profit maximizing level. Any deviation from this level will result in one party exercising greater control than the other, and thus, will lead to a situation of either pure monopsony or monopoly, or nonexistence of both parties. [D43, C78, C61].
AB - A long standing controversial issue in the literature surrounding the bilateral monopoly is the determinacy of equilibrium price and quantity when the seller and buyer maximize their joint profits. This controversy led to incorrect presentation of bilateral monopoly solutions in the literature. In this study, we employ a dynamic optimization model to simultaneously determine the equilibrium price and quantity transacted between the buyer and seller. We also show that for the bilateral monopoly to achieve equilibrium they must transact the intermediate product at the hint profit maximizing level. Any deviation from this level will result in one party exercising greater control than the other, and thus, will lead to a situation of either pure monopsony or monopoly, or nonexistence of both parties. [D43, C78, C61].
UR - http://www.scopus.com/inward/record.url?scp=84895369012&partnerID=8YFLogxK
U2 - 10.1080/10168730000000005
DO - 10.1080/10168730000000005
M3 - Article
AN - SCOPUS:84895369012
VL - 14
SP - 71
EP - 84
JO - International Economic Journal
JF - International Economic Journal
SN - 1016-8737
IS - 1
ER -