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| Author: | Choudhary, M. A. Orszag, J. M. |
| Title: | Costly customer relations and pricing |
| Journal: | Oxford Economic Papers
2007 : OCT, VOL. 59:4, p. 641-661 |
| Index terms: | consumer behaviour customer relations monopoly market share price determination United Kingdom |
| Language: | eng |
| Abstract: | The article analyzes monopolists' markups when demand boosts. The authors show that in a situation in which monopolist has certain costs for servicing its customer-base, price markups may be countercyclical. Monopolist has incentive to respond to higher demand by expanding its market-share with lower markups when each customer will buy on average more than previously and thus, the costs of servicing are spread across a larger volume of output sold. Based on data from UK, some empirical evidence is found to support the hypotheses. |
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